How is the south-west property market faring?

As the south-west’s largest chartered accountancy and advisory firm, at Monahans it is crucial that we have a comprehensive understanding of the markets in which we operate. Not only to stay abreast of the developments that might impact our broad spectrum of clients, but also to ensure that the service that we offer is meeting their evolving needs.

To get a more in-depth understanding of how businesses in the south-west have been faring over the last year, we commissioned a survey of management teams, senior executives, and business owners at more than 300 micro, small, medium and medium/large-scale enterprises throughout the region.

The results of this research have given us a sense of the level of adversity faced in the business community over the past 12 months, but also the resilience shown by business leaders which, in many cases, is helping organisations to bounce-back and to show positive signs of growth.

The property sector is just one of the sectors we operate in. Not only is the industry crucial to our client base, but it is also an integral part of the UK economy. The UK property sector directly employs more than 1.2m people and contributes over £100bn to the economy each year.

The industry has also been on a steady growth trajectory over recent years. According to government data there were 113,785 companies working within property last year including estate agencies and property management firms, in both residential and commercial. This is a 2.85% increase from 110,710 businesses the year previous and puts the growth of the property sector ahead of the health, entertainment, education and construction sectors.

We know that behind many of these businesses are hardworking individuals and teams who are navigating unpredictable market conditions, which is why we tailor our services to the unique needs and ambitions of each individual business that we work with.

Martin Longmore, Partner explores the challenges that businesses operating in the property sector are facing and how Monahans is supporting them.

Silver linings

It seems there has been a lot to be positive about for businesses in the property sector; despite half (50%) experiencing difficulties on account of rising energy prices, it was one of only two sectors (the other being agriculture) where none of the respondents have seen decreased turnover in the last 12 months. In fact, 50% of respondents reported that their business was in a better position than it was 12 months ago, and half (50%) reported an increase of turnover in the last financial year (averaging an increase of 29%).

Similarly, 25% of property businesses reported an increase in headcount, averaging an increase of 32%, while none reported a decrease. On a scale of 1 to 10, 10 being the most buoyant, respondents gave an average score of 6.8 – sitting just below the average of 7.0 given across all sectors.

Challenges on the horizon

Despite the clear resilience shown by businesses operating in the sector, the last year has also come with obstacles to growth. A quarter of respondents, report being in a worse position than they were 12 months ago and 25% were forced to make redundancies.

The main challenges faced in the last year include energy prices (50%), recruitment/retention (25%), inflation/rising operational costs (25%), unpredictable customer preferences and generating new business.

Many of these issues are also expected to continue in the coming months, with even more businesses (75%) anticipating energy prices to be a top challenge in the next six months, followed by political events (50%), unpredictable customer preferences and inflation/rising operational costs.

These concerns are also being compounded by uncertainty around legislation changes that could affect the sector - Labour’s move to increase Stamp Duty Land Tax (SDLT) on anyone that owns more than one home (including landlords), for example, is likely to have an impact on the buy-to-let market and property chains in which there is a second home purchase. There is also yet to be a commitment to extend the stamp duty exemption for first-time buyers, which is a potential cause for concern.

How can Monahans help?

As businesses look to navigate the fluctuating market over the next 12 months, the Monahans team will be on hand to provide clients with up-to-date guidance and to support them in making decisions in line with their long-term growth plans.

The value of an accountant doesn’t just lie in what they can do on a business’s behalf but also in how they can empower individuals within a business. Helping them to regain control of their finances, and ensure that their money is working for them, rather than the other way around.

Whilst unpredictability is inevitable, we help our clients to get out ahead of whatever is coming their way, take command of their finances and, most importantly, enable them to continue to deliver invaluable services to the UK.

If you need support, guidance or to discuss your options, get in touch with me today, I’d be happy to help.

To download the full market report, visit the Monahans website: https://www.monahans.co.uk/publications/swresearch-july24

Martin Longmore