Thus, the competition among real estate agencies will be more and ore intense. 2. Threat of new entrants Foxtrots Group PLY is one of the city biggest real estate agents. Firstly, the access and exit barriers of real estate are high, it is difficult for enterprises to enter and grab the property market in a short period of time. Secondly, as Foxtrots mentions in 2014 Annual Report, in recent years, since the uncertainty political and economic in the KICK and Europe, some of the adverse changes in government policy, laws and more serious mortgage loan regulations may influence the residential property sales or lettings transactions.
Thus it can be seen that new entrants will have little effects on he existing real estate agencies. However, with less than half a month before the votes of UK (7th May), through the data from the Bank of England indicated the risky mortgage were in an increasing statue, which never appeared in last nine month (Wright, 2015). This is absolute good news to real estate industry. The threat of new real estate agencies entrants will be more and more serious under this trending. 3.
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Threat of substitute products Porter (1979) believes that the competition pressure will be more powerful if the price of substitute products is low, as well as the low switching costs of consumers. For the real estate industry in the KICK, one of the threats of substitute products is that the government provide house for low-income, such as affordable social rents housing and council housing. These people can apply affordable housing only using half of the market price, or even free to live in.
But they cannot resell or rent to others. The good news is that this kind of affordable housing only occupies a minority group. And this cannot make much threat for the whole real estate industry. 4. Bargaining power of suppliers In recent years, more and more building regulations and restrictions have en put forward, so there are few number of new estate launched. But with the growing population of London, the existing housing seriously can not meet the market demand, which result in an increasing bargaining power of suppliers. . Bargaining power of buyers In London property market, although there are a lot of real estate agency competitors, they provide the housing prices are almost the same. But for every resident, housing is the most essential property of life. Therefore, while the switching cost is low, buyers bargaining power is still much below than Foxtrots Group PLY (2014). Annual Report and Accounts. Porter, M. E. (1979). How Competitive Forces Shape Strategy, Harvard Business Review. Wright, B. (2015).