The multi-billion rand property industry in South Africa has already lost 55 000 registered estate agents in the current property recession. This is a direct result of weaker housing market conditions. It is quite possible that thousands more estate agents could vanish from the property market, showing just how grim the market is. This is very bad news for the South African economy and the housing market in particular as competition is eliminated from the market, leaving only the big dogs.
Many small agencies have closed their doors because the little action that there is in the market is being swallowed by bigger and stronger agencies since mid 2006 , and of the 90 000 estate agents in boom times, only 35 000 remain.
Andrew Golding, chief executive of Pam Golding Estates, says everything depends on how soon the market will turn. He does not expect a big improvement this year because of the bank’s stricter lending criteria.
Kura Chihota, executive director of the Leapfrog property group, a franchise estate agency group, says it is a question of cash flow that smaller agencies are taken over by larger agencies.
Smaller agencies are lacking the money to maintain their advertising spend which basically eats them up from the inside. Without advertising the property deals start drying up and without property deals there is no profit, it’s a vicious circle.
The new survival trend is for agencies to consolidate and restructure to see themselves through the tough times. Lets hope the property market stabilizes in the coming months to prevent further unemployment and bad news for estate agents and sellers. As discussed in the South African housing market article, South Africa is in the fortunate position to lower its interest rates which will hopefully kick start the South African property market. A decision on an emergency interest rate cut is to be taken today, Thursday 12 March 2009 which could see the South African interest rate dropped.
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graag wil ek net my mening lug mbt bg artikel - ek stem nie saam met die skrywer nie, dit is juis die kleiner agentskappe wat oorleef, omdat hulle kan bekostig om kleiner persentasie kommissies te skryf. Die wat in die heel slegste posisie is, is die franchisees van die groter groepe. Hulle het steeds al die uitgawes van hulle eie kantore en advertensies, daarby moet hulle “royalties” afstaan, en hulle word aan bande gelê deur die groep se reëls en regulasies, en word dikwels verplig om by te dra tot ander projekte waarby hulle nie noodwendig direk baat vind nie.
[...] recent post on the myrof.co.za blog outlines the harsh economic conditions currently influencing South African [...]
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