MERVYN SMITH ENTER OUR 45TH YEAR – and still outselling all other agents!
As 2020 and a new decade dawns, Mervyn Smith have started our 45th year of business on Ham Parade. The legendary Malcolm at M & J Hardware has done more time on the Parade (53 years! – you get less for murder) although the shop was Dorlings till Malcom bought them out in 1988. Mr Tanna acquired Southcroft Pharmacy not long after Mervyn opened and the chemist may be the longest surviving business on the Parade, possibly right back to the 1930s. In the photos we see Mervyn in 1979 – complete with regulation trousers of the era- and early satisfied clients whose kids must now be in their 40s! We also show how our office used to look – inclduing in the snow at the end of the noughties, – next to Giftbox and Aristocrat Dry Cleaners (remember them?)
Current manager Stan Shaw took over the mantle from Mervyn in 1994 and hase done 26 years’ service so still only a Johnny-Come-Lately ! At Mervyn Smith we’ve had 45 mostly successful years, but with some big blips, especially the 1989-1994 crash and the 2008/9 Financial Crisis when the average house price in Richmond Borough fell 18% in just 16 scary months from January 2008 to the trough in April 2009. We’ve had a huge price recovery since of course, but one thing has never recovered – the number of properties that sell each year. Over the last decade people just haven’t moved house as much as they used to.
In the early days we regularly sold flats or small houses to families who then relatively quickly traded up to larger ones in the area. They don’t do that as quickly now, – if at all. For many it’s cheaper to extend, or they just put up with or remodel what they’ve got. Some regretfully leave Ham and Petersham and Kingston– where they would prefer to stay and may have a support network, – but it’s the only way to afford more room or a garden for the kids. And in turn we often sell their properties to people doing the same thing moving here from inner West London, – Hammersmith, Fulham, Chiswick all being typical buyer sources. They move here to get a bit more breathing space – both in their home and around it.
When the recession bottomed in April 2009, the average house in Richmond Borough cost £351,764. By the 2016 EU Referendum it had shot up to £677,067. It’s wobbled since and fallen back slightly. But its still 85% more than it was only 10 years ago. Whose income has increased 85% in the last decade? Only a chosen few. The Office for National Statistics say average pay in real terms was actually £1 a week less in October 2019 than it was in April 2008.
How did this massive discrepancy develop between income and house prices? The knee jerk account is we didn’t built enough houses, but that’s been true for the last 40 years so it doesn’t explain why prices shot up so much in the last decade. What was so different about the 2010s was it’s never been cheaper to borrow money, larger loans could be taken and that artificially caused asset prices to soar.
Since the Bank of England was formed in 1694 (- which was even before the formation of the UK!) – its base interest rate has never been as low as in the last 10 years. It was slashed to 0.5% in the Financial Crisis and even to 0.25% after the EU Referendum. I don’t think we appreciate how much this impacted the housing crisis and the disenfranchisement of many from home ownership. Those lucky enough to scrape together a deposit or borrow from the Bank of Mum & Dad (the UKs 5th biggest mortgage lender) might get a mortgage rate under 2% and take on a larger debt than in the previous decade. When they couldn’t borrow enough, banks and building societies increased mortgage terms from 25 years to 35 years and more. But high prices prevent even those on the ladder getting the property they need or the area they would choose. And when Central Banks try to restore interest rates to more normal levels, growth slows, the stock market wobbles and we go back to square one. Recently even the Banks own blog (Bank Underground) admitted the same curious conclusion – that its own interest rate policy explains most of the rise in house prices in the 2010s rather than supply and demand.
Back on the High St, although house prices have risen, estate agents face survival of the fittest as income drops with fewer sales and competing fees for fewer instructions. 4 offices closed in Richmond in 2019 – Gascoigne Pees, Barnard Marcus, Winkworths and Foxtons -even though the first 2 were once the biggest players in town. But both were part of large chains with business models needing sales levels that don’t happen anymore. Independent agencies can adapt better to changing circumstances. Gascoigne Pees are in the troubled Countrywide group – the largest UK estate agency chain, – who’ve closed around 250 of their 850 offices in the last 3 years. In 2015 its share price was over £6. On January 1st 2020 it was 7p. (So embarrassing they’ve just ‘consolidated’ the shares with fewer numbers at a higher face value). On Ham Parade, Countrywide had a Mann and Co office for years. They rebranded it in 2010 as Gascoigne Pees but that too folded in 2016. It’s now Lodge Funeral Directors – one service for which there will always be a market! So you may be pleased to know the days of walking down a High Street and seeing a dozen estate agents are gone. You’re more likely to find a dozen coffee shops now.
In the first half of 2019, estate agencies were the 4th largest category of UK high street closures (after restaurants, pubs and clothes shops). It’s not all about online competition. Last year larger pub chains closed outlets while smaller independent pubs increased. Online estate agency achieved some market share but it’s stalled. It has the inbuilt design fault of taking money upfront with no incentive to finish the job, when getting a sale from offer to completion can be the trickiest bit requiring experience, patience and skill to hold it together.
So whilst our own turnover was down in 2019 it wasn’t drastic, thanks to our high market share. The largest property website Rightmove reported Mervyn Smith had 43% of all sales agreed in 2019 in postcode sector TW10 7 (most of Ham and Petersham) – out of 17 different agents. We sold over 4 times as many properties here as the next best agent. Even including TW10 5, which has the rest of our area but goes over into Richmond and Sheen, then we were still 1st out of 29 offices, selling twice as many properties as the second-best agent. Mervyn Smith were the top selling agent in postcodes KT2 5 and TW10 7 combined (which include most of North Kingston and Ham), – out of 36 different agents. We agreed over twice as many sales as the next best agent. So if our figures are down a bit it must be very tough for others.
So we don’t know if we’ll be around another 45 years and after the last 10 years only a mug would predict the next 10. We just intend to continue being successful for as long as possible. Here’s to the next decade!