Published on 09/12/2015 by Punchmedia

Agencies Moving With Real Estate Trends

Real estate agencies have been working hard over the past five years. Numerous factors have created a dynamic environment in which change has been necessary to stay afloat.

Rising activity in the residential market, pressure on commission rates and the growing importance of property management as a revenue stream have all been key factors, according to an IBISWorld Report.

Overall, the past five years have been more positive than negative for the industry. Revenue is forecast to grow at an annualised 2.0% over the five years through 2015-16, to reach $10.2 billion.

The Residential Market

The residential housing market has performed well over the past five years, due to several factors. Government initiatives such as the First Home Owner Grant and the First Home Owner Boost stimulated demand for housing at the beginning of the period.

Simultaneously, a large number of baby boomers have started to downsize their homes. As their children move out, baby boomers have started opting for smaller, less expensive dwellings that are easier to maintain.

The balance that remains after selling their existing home and buying a smaller one has often been used to purchase an investment property.

Performance has Boosted Demand

A strong performance in the residential property market has boosted demand for industry services. Over the five years through 2015-16, the number of housing transfers is expected to increase marginally.

A higher number of housing transfers indicates greater demand for real estate services. Additionally, housing prices are forecast to grow at an annualised 4.3% over the same period.

Since real estate agents receive commissions as a percentage of the value of the dwelling, this trend has supported industry revenue growth.

Further reductions in residential housing loan rates are anticipated in 2015-16. Consequently, industry revenue is forecast to expand by 2.6% over the year.

The Commercial Market

The commercial market is also a significant source of industry revenue. Currently, foreign investment is driving expansion in the commercial market.

This is because many overseas investors view Australia's property market as a safe growth area.

Healthy economic conditions, including strong market transparency, market stability and geographical proximity to emerging markets, are attracting more foreign and local investment.

The bulk of this demand growth has occurred within the office property segment.

Current Trends

Employment numbers have increased marginally over the past five years. This increase is largely attributable to higher numbers of residential real estate agents.

In the property management and leasing product segments, the number of properties under management per employee is growing.

In a bid to achieve greater scale, larger players have been buying up smaller companies. This is expected to result in an increase in the number of establishments, coupled with stable enterprise numbers over the five years through 2015-16.

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Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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