Bear market claws into agents' jobs

Both nationally and state by state property values continue to reduce. As a result estate agents are finding that it is becoming more difficult to maintain a previous level of income. This could amount to as much as 20 per cent in certain areas of Melbourne.

Lower remuneration predominately in the form of commission on sales ranging on between 2 per cent to 5 per cent on sales.

Wearing sales levels for several months and sliding prices are now making things difficult for agents.

Real Estate Institute of Victoria shows that property sales by auction are down by almost 14% for the current year to date.

1265 less properties changed hands than the first week of July 2007.

The clearance rate which averages 83% to July last year has fallen to 66%

This is the lowest since the 2005 weaker market. Many of Melbourne's city suburbs are experiencing falling prices.

The REIV reported average sales across the board to be 8.4% for the March quarter.

Messrs RP data estimated a fall of 2% in 3 months to May.

REIV said that the industry was probably incurring a 10% to 20% reduction in revenues.

This would be on average per area which varied from suburb to suburb.

Christopher Koren of Morell & Koren felt that income for some larger agents could reduce turnover by 30-40 %. He felt that it would not be long before staff cuts occur.

Agencies were already cutting expenses with some reviewing their commission structures.

Published on July 7-th, 2008 in Financial Planning
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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