The property boom is over, as real estate agents battle for leftovers
The property boom is over, according to the REIA. Photo: Getty
The property boom is over, according to the Real Estate Institute of Australia, with the country’s real estate agents left to fight it out for customers.
The Australian property market is experiencing “a rationalisation of agents due to tighter lending criteria which is seeing longer listing times and stagnant prices particularly on the east coast”, the REIA said.
Home values in Sydney dropped 4.5 per cent over the 2016-17 financial year, according to CoreLogic, with further falls predicted.
“Gone are the days of the boom market where agents were able to quickly sell properties with limited marketing,” REIA president Malcolm Gunning said.
“We are already seeing that the current conditions are putting a strain on low-cost models which rose to prominence at the height of the market.”
Mr Gunning said in a slower and more volatile market, skilled professionals with experience and technology will be most effective and sought by vendors as trusted advisers.
The comments appear to be a veiled jab at UK-based real estate industry disruptors Purplebricks, and the flat-fee firm’s ambitions to up-end Australia’s commission-based real estate model.
Rather than the commission-based model – generally around 2 per cent of the sale price – used by most real estate agents in Australia, Purplebricks charges a flat fee for marketing and selling a property with the help of a “local property expert”, ie a real estate agent.
In Australia, Purplebricks’ fees range from $4999 for a private treaty sale, to $6369 for sale by auction.
The company last week announced losses of $21.2 million dollars for the 2016-17 financial year in Australia.
Despite the results, Purplebricks chairman Paul Pindar said he expected the Australian arm of the business to reach “monthly profitability within 12 months”.
