Subdued house prices and dwelling approvals are affecting real estate agencies
Melbourne, Australia (PRWEB) August 11, 2012
Over the past five years, the Real Estate Agency Franchises industry has contracted. Mired by the global financial crisis, the industry's major markets have all but shut down. Residential and non-residential sales have dropped, while rentals have increased due to a shift in consumer behaviour. According to IBISWorld industry analyst Aries Nuguid, “Consumers have been more focused on paying down debt than increasing it, resulting in lower dwelling approvals and slow growth in housing prices.” Government stimulus campaigns have provided some support to the industry, but overall consumers are remaining cautious. As a result, industry revenue is expected to contract at an annual rate of 1.7% over the five years through 2012-13.
The Real Estate Agency Franchises industry did grow during 2010-11 and 2011-12, due to lowered interest rates and a rebound in consumer sentiment. Moreover, an increase in the resources boom incited growth in Western Australia. However, the growth spurt was marred by adverse weather conditions over the first half of 2011. Overall growth was also muted due to other factors, such as the Victorian Government's decision to scrap its First Home Bonus rebate scheme in June 2012. Although lowered interest rates were expected to offset the effect of losing the bonus, Australian Bureau of Statistics data for May and June 2012 suggested otherwise: residential property sales were down. “The industry also contended with increased competition from direct private property sales,” says Nuguid. As consumers and businesses have become increasingly internet savvy, demand for direct sales or leasing without the aid of an agent has been on the rise. The industry is highly fragmented, with the two largest players – Ray White (Real Estate) Pty Ltd and LJ Hooker Limited – together accounting for only a small share of the industry. Market share concentration is expected to have increased over the past five years as industry consolidation and rationalisation have been rampant.
The outlook for industry operators over the next five years suggests a return to growth. Slow growth in residential housing prices will lead to even slower growth in fees and commissions for the industry. Marginal growth in property sales volumes over the period will also adversely affect profit margins, resulting in continuing consolidation in the industry. For more information, visit IBISWorld’s Real Estate Agency Franchises industry in Australia report page.
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IBISWorld Industry Report Key Topics
This industry operates real estate agency franchises. Industry firms (franchisees) receive branding, marketing, administrative support, training and other services for franchise, royalty and renewal fees to the franchisor.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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