Agents exit property sector as sales and prices drop
Tuesday, February 14, 2012/
Queensland and Western Australian estate agent numbers have slumped as a consequence of a nationwide drop in transaction volumes and property prices.
Last year’s volumes were about 13% lower than volumes in 2010 across Australia, according to RP Data head of research Tim Lawless.
The figure was 26% lower than 2009 and 33% lower than the recent highs of 2007.
“The real estate industry is doing it tough,” Lawless concludes.
David Airey, president of the Real Estate Institute of Western Australia, reports the volume of sales in Perth last year was the worst in two decades and many agencies had laid off staff.
“A typical example is where you had 10 or 11 agents, now you only have five or six,” he says.
“If you didn’t have a rent roll, your agency would be totally dependent on sales and it’s probably been reduced to partners and principals only.
“That seems to be a pattern we’ve seen across Australia,” he told Fairfax Media.
Lawless notes that the price declines have also affected the agency bottom lines.
He says the total value of sales in 2011 was down 18.3% compared with 2010.
Lawless estimates estate agent commissions are likely to be down by about the same amount.
Noting agents are generally paid based on percentage of the sale price, Lawless says the falls in home values had compounded the pain already caused by slow market conditions.
“At the same time, according to the latest IBISWorld Real Estate Industry report, the number of people employed in the industry has fallen by around 1,800 over the past year after rising by 940 employees in 2010-11,” he says.
“The reduced number of agents suggests the commission pie needs to be cut into fewer slices, which is likely to have eased the income fall on a per agent basis.
“In fact, the IBISWorld report suggests that income per employee in the real estate industry hasn’t changed a great deal over the past four years, remaining around $59,000 since 2008 after generally trending down since 2002.”
This article first appared on Property Observer.
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