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, according to the Real Estate Institute of Australia (REIA).
“The credit squeeze is seeing less money and properties on the market for longer, particularly in Sydney,” REIA President Malcolm Gunning said.
“This will encourage an environment where those agents that are better qualified, more skilled, from respected established agencies with strong local community involvement, will begin to dominate,” he said.
According to Corelogic’s latest housing market update in June 2018, homes in Sydney were selling in 43 days on average compared with 31 days at the same time last year.
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.
“Selling real estate is not a walk in the park. Gone are the days of the boom market where agents were able to quickly sell properties with limited marketing. 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.
Related reading: Purple Bricks 'misleading the public', says REIWA
The comments appear to be a swipe 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, which is generally around 2 per cent of the sale price, used by most real estate agents in Australia, Purplebricks charge a flat fee for marketing and selling a property with the help of a “local property expert” - in other words, a real estate agent.
Related reading: Purple Bricks found out
The company last week announced losses of $21.2 million dollars for the 2016-17 financial year in Australia.
At least 27 agents have quit Purplebricks since March, due to the "unsustainable income model" that many of them can't afford to live off.
"At $1,000 per listing, it is little wonder some of the more professional Purple Bricks employees and contractors are leaving. Not only does the Purplebricks model risk their reputations, they’ll go broke working 70+ hours a week doing it," Real Estate Institute of Western Australia (REIWA) President, Hayden Groves, told WILLIAMS MEDIA.
Despite the results, Purplebricks chairman Paul Pindar said he expected the Australian arm of the business to reach “monthly profitability within 12 months”.
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