One of the industry’s top independents has forecast that competitive pressures will lead to a significant decline in rival real estate agencies.
Peard Real Estate, which has 12 offices in Western Australia and claims to transact $1.5 billion of property per year, believes the struggling Perth market is set to experience a major consolidation.
Chief executive Peter Peard said traditional corner-shop agencies will suffer the same fate as old-fashioned hardware businesses.
“Rationalisation has seen the local hardware shops being replaced by Bunnings and Masters, and the same rationalisation in resulting in small real agencies being replaced by super agencies,” he said.
“This trend will now accelerate, and I believe in the next two years that the industry will lose up to 10 per cent of the current agencies.
“In addition, the number of sales representatives will also shrink as only the top performers backed by the resources of larger real estate companies will exist in a much tougher business environment.”
Perth’s median property price fell 0.7 per cent over the quarter to July 31, while listings jumped 20.3 per cent over the year to August 16, according to CoreLogic RP Data.
Mr Peard said that small agencies in Perth will struggle to compete against highly resourced businesses with a clear ownership structure.
“Small real estate companies will find it difficult to financially survive with Perth property sales now at their lowest level in several years,” he said.
“In the last month, I have been approached by three small agencies to sell their rent rolls, highlighting the financial pressure small operators are now under in the Perth property market.”
Mr Peard said the Perth market has been hit by the downturn in the resources sector and a massive oversupply of new houses – as well as APRA’s investor lending crackdown.
“While these measures are aimed at cooling the Sydney property market, the time of these policies is particularly bad for the Perth property market,” he said.
“Small agencies with high overhead costs simply cannot financially survive in the current property market, and these negative conditions are expected to continue for some time.”
Peard Real Estate Hillarys finished 16th in this year’s Top 50 Sales Offices ranking.
[Related: How to survive the next downturn]