Agency profits slide on higher costs

Agency profits slide on higher costs

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Simon Parker

The annual profit for small real estate agencies is now around $40,000 lower than it was in the 2008/09 financial year, an online-based financial benchmarking company said.

The national online portal, Real Business First, said agency profitability had dropped four per cent since 2008/09 to an average 12.28 per cent. For an agency turning over $1 million per annum, this equated to a drop of $40,000.

Real Business First, which has been jointly set up by the Real Estate Institute of NSW (REINSW) and Deloitte Touche Tohmatsu, benchmarks the financial performance of real estate agencies nationally. The financial data is obtained directly from participating agencies, each of which pay a monthly fee to use and access the service.

Real Business First, which based its findings on 56 predominantly NSW-based agents, said in a recent blog that the number of sales made during 2010-11 year fell for the overall market, although the more successful agencies still managned to generate more sales in this period.

“What is also apparent is agency profitability has also been in decline,” the blog said.

Between the 2009-2010 and 2010-2011 financial years, it said occupancy costs rose from 5.38 per cent to 5.60 per cent, selling expenses rose slightly from 5.25 per cent to 5.45 per cent, while employment costs jumped from 58.35 per cent to 60.63 per cent.

It was this latter rise that had the biggest impact on the bottom line of most agencies, the company said.

Simon Parker

The annual profit for small real estate agencies is now around $40,000 lower than it was in the 2008/09 financial year, an online-based financial benchmarking company said.

The national online portal, Real Business First, said agency profitability had dropped four per cent since 2008/09 to an average 12.28 per cent. For an agency turning over $1 million per annum, this equated to a drop of $40,000.

Real Business First, which has been jointly set up by the Real Estate Institute of NSW (REINSW) and Deloitte Touche Tohmatsu, benchmarks the financial performance of real estate agencies nationally. The financial data is obtained directly from participating agencies, each of which pay a monthly fee to use and access the service.

Real Business First, which based its findings on 56 predominantly NSW-based agents, said in a recent blog that the number of sales made during 2010-11 year fell for the overall market, although the more successful agencies still managned to generate more sales in this period.

“What is also apparent is agency profitability has also been in decline,” the blog said.

Between the 2009-2010 and 2010-2011 financial years, it said occupancy costs rose from 5.38 per cent to 5.60 per cent, selling expenses rose slightly from 5.25 per cent to 5.45 per cent, while employment costs jumped from 58.35 per cent to 60.63 per cent.

It was this latter rise that had the biggest impact on the bottom line of most agencies, the company said.

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