Major correction for sales agents

THE downturn in Western Australia's housing market has had a huge impact on the state's real estate industry, with businesses consolidating their operations and a number of sales consultants leaving the sector.

Anecdotal reports from real estate agencies suggest the number of employed consultants has dropped by 25 per cent during the past year.

In Mandurah, the fall has been even sharper, according to Real Estate Industry of WA councillor Kent Murphy.

Twelve months ago, there were an estimated 300 sales representatives active in the region, but the current figure is between 100 and 120.

The fallout has not been confined to sales staff either, with some of WA's largest agencies - Harcourts, First National Real Estate, LJ Hooker and Professionals Real Estate Group - replacing their chief executives or state managers this year.

REIWA president Rob Druitt said that, due to a 35 per cent fall in sales volumes in the year to June, merger activity between agencies was expected to pick up in the latter part of the year, driven by a need for greater efficiency.

"With such good employment opportunities in Western Australia, it doesn't take long for people to seek other opportunities," Mr Druitt said.

"But agents are not unaccustomed to difficult market conditions and they adapt quickly. A lot have cut back on advertising and staff."

The consolidation has been felt by REIWA, with agencies across the board reducing their spending on web listings, photography and training.

However, a widespread shakeout is not necessarily a bad thing for the industry, according to Harcourts chief executive Andrew Moore.

"As there's a general income reduction in the industry, there's going to be...a reduction in the number of people operating as real estate agents in Western Australia. I think the sooner that happens, the better for all of us," Mr Moore said.

"We had a lot of agents come into the market during that boom time, and for a lot of those people, from an economic perspective, it's a lot more profitable for them to go back to being plumbers and accountants and whatever else they were doing before."

Mr Moore said he hoped the downturn would produce major structural changes in the real estate industry.

"We're about to move into a period where there's going to be a massive change in the people in our industry. In five years' time, you could safely say at least half of the people in our industry will be [new]...and that's a great time to implement change regarding quality of service and just the general raising of professionalism," he said.

"I've seen it happen in other states, and it's what we need. I think we need to maintain a high level of agents...and we need to make higher barriers to entry for people owning agencies."

Ray White Real Estate chief executive Mark Whiteman said the industry would continue to be self-regulated, with the downturn having widened the gap between those agencies that were performing and those that weren't.

"A performance-based industry like we have is a good thing," he said.

Mr Whiteman said there was an element of fatigue among business owners, with experienced sales consultants electing to leave rather than face another downturn.

"That's another factor that's starting to play a role right through the industry. I don't think I've seen so many mergers, shutdowns, a real rationalisation and consolidation phase. [If] we're geared right, for a group like ourselves, that's where an opportunity is," he said.

Raine & Horne WA managing director Mark Sinclair said while closures were occurring, it had only affected a small minority of agencies in WA to date.

"There's certainly been, over the last eight months, cases where there has been a merging of rent rolls [between agencies], and others that have elected to close their doors and take profits," he said.

"With the downturn in the property market, business owners are seeing it as an opportunity to exit the industry."

Mr Sinclair said he was aware of at least six real estate agencies that had sold their rent rolls and closed down, with a further 20 or so consolidating to reduce running costs.

"People are leaving the industry, and that's a good thing, because too many people come in during the good times," he said.