Walking down an average town centre high street in the UK, it seems like every second window is an estate agency. But the industry is showing severe signs of strain. Not just branches, but whole businesses are closing down, while shares in the few listed estate agents like Savills, or Rightmove, the property website, have plummeted.

This is due less to falling house prices than to the sharp decline in transactions, the backbone of an agency’s business model. In the first half, Savills says transaction volumes in London nearly halved year-on-year, while the Council for Mortgage Lenders predicts transactions in 2008 will be more than a third lower than in 2007. So far, according to the National Association of Estate Agents, the most obviously affected are newer industry entrants – which often have very narrow profit margins thanks to the lower fees they charge – and corporate chains which are closing branches.