Property industry sheds agents

Large numbers of estate agents have been forced out of business by the severe slump in the property market, those in the industry say.

Lew Geffen Sotheby's International Realty estimates that 30 percent to 40 percent of agents have left the industry since the end of the boom about a year ago.

Bigger property firms like Lew Geffen say the trend is a good thing, because it has rooted out unprofessional agents and given consumers access to improved services from established brands.

But smaller players say they are being pushed out of the industry.

"As predicted, South Africa's real estate industry is consolidating in response to the current slow market, and shedding agents who are unable to deliver a professional service to their clients," Lew Geffen Sotheby's said in a statement earlier this week.

It blamed the property crunch on the National Credit Act, which has made it harder for consumers to get access to credit.

As a result some institutions had a bond acceptance rate of below 40 percent.

Lew Geffen said the ascendancy of names such as itself meant clients benefited from the great array of services it had to offer. These included local and international referrals, estate agent training and marketing support, the company said.

House prices have sunk over the past two years, as interest rates climbed, inflation surged and consumers found themselves with considerably less cash in their pockets. Prices fell by 9,6 percent year-on-year in July, when adjusted for inflation. That was the biggest real price decline since late 1992, said Absa, the country's biggest home lender.

Andrew Golding, chief executive of Pam Golding Properties, said his company was confident that it could grow its market share in this climate.

Small property entrepreneurs like Fatima Ahmed have a different view.

"I've been in the property industry for 15 years. I work mostly on referrals from past clients. If they were not happy with me, they would not have referred them," she said.

Those in Ahmed's position generate revenue of a few hundred thousand rand a year, while one property sold by the likes of Pam Golding and Lew Geffen can fetch millions.

Alan Erickson owns Viking Properties in Lansdowne, which operates in the R500 000 to R1-million market. He said industry giants swallowed up the smaller agencies during difficult times.

"Big corporates are able to sustain themselves through these times by gaps left in the market ... by smaller agencies that had to pack up," he said.

"They will make it seem as if they are doing the consumer a big service, but in effect the smaller agencies are suffering and it's not necessarily that they are bad agents, it's just that the market has affected everybody."

  • This article was originally published on page 9 of Cape Argus on October 16, 2008

Article By: Gershwin Wanneburg - from - www.iol.co.za