Dreary house price growth hits real estate agents

Another year of lacklustre house price growth has provided the backdrop for a gradually tougher climate for the real estate industry.

“As with 2011, property prices are just holding their own which impacts on agents’ commissions,” according to Herschel Jawitz, chief executive of Jawitz Properties.

“Unlike other industries where professional fees are charged, our commission doesn’t go up with inflation each year. The only ways our earnings increase is if property prices increase, or we sell more properties.”

Jawitz said that if property prices only went up by 2% or 3% in 2012 then, in real terms, commission earnings would decline. “Added to this, costs are increasing by at least 10%, and the equation becomes interesting. Normally, if you are sacrificing margins you can try to make up the numbers with higher volumes but the numbers of sales for the most part are going to be flat year-on-year and, in some areas, may even decline.”

Essentially, fewer sales, flat prices and homes taking longer to sell equated to estate agencies spending more money with less return.

Jawitz said that because of these factors, 2012 would be another very competitive year for the industry, as growth would have to include taking market share from competitors. “The bigger brands should be better off by the end of the year,” he said.

The decline in the number of estate agents supported this view with the fall off in agents coming mostly from the smaller agencies that had not been able to sustain themselves in a challenging market. The number of estate agents had decreased by 60% since the height of the boom in 2006/7 to about 25 000.

According to Jawitz, most of the bigger national franchised brands or the larger brands in the metro areas had fared significantly better in this period and while absolute market sales might not have been increasing, relative market share would have grown.

Key success factors for 2012 would be similar to many industries — meeting clients’ service expectations, employing technology as a critical enabler and most importantly, upholding the integrity of the brand and the people that represented it. — I-Net Bridge

Staff Reporter
Guest Author
Advertisting

Senior SANDF colonel involved in an alleged business scam

A senior soldier who is part of South Africa’s peacekeeping missions is accused by her colleagues of swindling them out of of hundreds of thousands of rands in a nonexistent business deal

AU pushes the frontiers of transitional justice

Now these important policy developments must be implemented

Mass store and job cuts at Massmart

Changed market conditions and an appalling economy has hit low end cash-and-carry outlets

Courts to guide land expropriation

Two bits of law need to be approved before a court can decide if land owners will be compensated
Advertising

Press Releases

New-style star accretion bursts dazzle astronomers

Associate Professor James O Chibueze and Dr SP van den Heever are part of an international team of astronomers studying the G358-MM1 high-mass protostar.

2020 risk outlook: Use GRC to build resilience

GRC activities can be used profitably to develop an integrated risk picture and response, says ContinuitySA.

MTN voted best mobile network

An independent report found MTN to be the best mobile network in SA in the fourth quarter of 2019.

Is your tertiary institution is accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

Is your tertiary institution accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

VUT chancellor, Dr Xolani Mkhwanazi, dies

The university conferred the degree of Doctor of Science Honoris Causa on Dr Xolani Mkhwanazi for his outstanding leadership contributions to maths and science education development.

Innovate4AMR now in second year

SA's Team pill-Alert aims to tackle antimicrobial resistance by implementing their strategic intervention that ensures patients comply with treatment.

Medical students present solution in Geneva

Kapil Narain and Mohamed Hoosen Suleman were selected to present their strategic intervention to tackle antimicrobial resistance to an international panel of experts.