Political considerations aside, the possibility of Brexit has sufficiently spooked estate agents enough that the CEOs of both Countrywide (LSE: CWD) and Foxtons (LSE: FOXT) spoke out last month over Brexit-related worries. Countrywide CEO Alison Platt said that the company is “mindful of the political and economic uncertainty surrounding the EU referendum [and] we are taking a cautious view of the coming months.” That may not sound very dramatic, but this type of comment from management should be a yellow flag to investors.

Platt may have simply been downplaying expectations for the next few quarters, but Brexit has the possibility to wreck major havoc on the UK’s property market. A recent report by Standard & Poor’s found that voting to leave the EU “could potentially reverse the significant boost to real estate asset values that the UK, and London in particular, has experienced in recent years.”

Of course, there are other research outfits that have found Brexit would have little effect, but it stands to reason that decreased immigration and businesses moving operations into Europe, as several have planned to do, would slow demand in London at the very least. This uncertainty is the last thing Foxtons and Countrywide need as GDP growth this quarter is forecast to slow to near non-existent and a litany of outside factors weigh on the traditional high street agencies.

The online issue

Chief among the outside factors investors need to fret over is the rise of online-only estate agents. Companies such as easyProperty and eMoov offer fixed-fee property sales starting at £495, well below the 2.5% of the final price Foxtons charges. And while online agents currently only have 5% of the overall market, they’re impacting their larger rivals’ bottom lines. In 2015 Countrywide’s average sale price fell 3% year-on-year and the company placed the blame squarely at the feet of online-only upstarts.

The 3% increase in second home and buy-to-let stamp duty is also a major factor in subdued investor enthusiasm for estate agent’s shares. Buy-to-let owners rushed to finish transactions in the first quarter before the new tax took effect on 1 April, which led Foxtons to warn that sales over the next quarters will be down significantly. This will affect both Foxtons and Countrywide, but will hit the former especially hard as prices in core London post codes have already been falling, leading Foxtons to branch out into lower price outer postcodes.

This confluence of headwinds has led the market to drive shares of Foxtons and Countrywide down 25% and 11%, respectively, in 2016. In such a highly cyclical industry as house sales, the uncertainty that would follow Brexit would likely send share prices of estate agencies plummeting even further.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.