By Ian Crooks
Recently, the Australian Financial Review reported 10,000 real estate agents, about one in six, had abandoned the profession in Australia in the past year. In the Courier Mail, the headline was ‘Agents leave in droves’. What does such an exodus mean for the property industry?
Figures from the Real Estate Institute of Australia (REIA) show many more people are currently leaving the industry than are joining it.
In the 2006 Census, 72,000 real estate agents were counted nationwide. The REIA estimates the number of agents had dropped to 60,000 a year ago. Now, they say, the figure is more like 50,000.
A significant fall in house sales, fuelled by international economic uncertainty and low consumer confidence, has reduced residential agents’ earning capacity. No longer able to rely on a steady flow of commissions, they are seeking work where they can be assured of a pay packet at the end of the week.
In Queensland, the REIQ estimates the industry has lost 30 per cent of employees since 2007. In that period, the volume of sales in the Sunshine State dropped 45.7 per cent, according to RP Data figures quoted by the Courier Mail.
In June, Ray White Surfers Paradise CEO Andrew Bell told the Financial Review the long period of prosperity prior to 2008 meant there was a whole generation of agents who didn’t know what a downturn was.
“The last time we saw a downturn as severe as this one was in the early 1990s,” he said. “So there’s a very large percentage of agents who have never experienced and don’t know how to operate in these market conditions, and they are usually the casualties.”
Bell hit the nail on the head. Experience is what counts in a challenging market. Real estate is an industry that, even at the best of times, has a relatively high turnover. REIA president David Airey says as many as 80 per cent of real estate sales people turn over within five years.
What all this means is that the agents who are still active in the current environment are survivors. More than survivors, they are strong performers who know their business and their market.
Sellers and buyers are the ones who stand to benefit most from an industry shake-out such as the one delivered since 2008.
As Resort Brokers Australia can attest, the strong can emerge stronger from a period of market weakness. A difficult operating environment causes you to revaluate, to focus on what you do best, and to do it even better.
Whereas buoyant times can artificially support under-performers, tough times expose their weakness. Companies such as ours can actually benefit by retaining the most effective and productive staff. We focus more strongly on training and honing the skills that achieve the best results for clients.
Personally, I have been through a number of market cycles, booms and busts, since I started in this industry in the 1970s. To have made tourism-related property sales a successful lifetime career stands testimony to the value of determination, professional practice and experience.
Times such as this raise the bar. They ask us to think differently, to innovate, to do better.
Many of you will know I was instrumental, a few decades back, in pioneering the introduction of motel leases, separating the operational and bricks and mortar components of properties. It was a game-changer.
It expanded the market, creating a business model that has proven very lucrative and a new stream of very attractive commercial investment opportunities. It is also a prime example of the valuable innovation that can arise when industries and people are challenged.
Agents still active in the current market have demonstrated their strength and resilience. You can bet, they are cream of the crop.