8 out of 10 agencies report revenue growth

New data has revealed that 79 per cent of agencies have seen their revenues increase over the last 12 months, with Queensland and Western Australia experiencing the strongest growth.

According to Macquarie Bank’s 2014 Residential Real Estate Benchmarking Report, this strong result in agency gross revenue is up from just 47 per cent in 2012, while it's reported that two thirds of agencies have also become more profitable in the last year.

However, Macquarie Bank has warned that as businesses ramp up to pursue new growth opportunities, there are signs that disciplined cost control and business management may be neglected in the intense competition for market share.

The report pointed to a strong correlation between profit growth and revenue growth, which suggests higher profits have been largely driven by higher volumes of both sales and properties under management, not improved efficiency or productivity.

Daniel Evans, head of residential real estate at Macquarie, said as agencies continue to grow, it is important they look at efficiencies and productivity to help limit their exposure to risk should the market take a downward swing.  

“To build success that is sustainable, agencies must develop a strong value proposition, an exceptional workplace culture and efficient processes,” advised Mr Evans.

The data also showed that on average only 20 per cent of respondents grew revenues by 30 per cent or more, outperforming the market and gaining market share from their competitors.

There continues to be marked difference among the states, with ACT and South Australia reporting revenue growth of 59 per cent and 60 per cent respectively, compared to 79 per cent in NSW, while 69 per cent of agencies in WA have experienced revenue growth of 10 per cent or more.

Meanwhile, client feedback suggests NSW agencies may have been impacted by a shortage of stock and intense competition for properties (reducing commissions), which has restrained revenue growth despite bullish conditions overall.

 

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