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Real Estate Agents in Australia March 2012   28

www.ibisworld.com.au

Operating Conditions

Level The level

of Volatility is Low

The volatility of the revenue growth for the Real Estate Agents industry over the past five years has been relatively low, thanks in part to the steadying effect of rental portfolios on revenue. Factors that have caused some stability have been related to the global financial crisis, which has affected the demand for properties and thus sales rates. The demand for real estate property has varied by sector (residential, retail, office, industrial and rural); however, A higher level of revenue volatility implies greater industry risk. Volatility can negatively affect long-term strategic decisions, such as the time frame for capital investment. When a firm makes poor investment decisions it may face underutilised capacity if demand suddenly falls, or capacity constraints if it rises quickly.

in general, demand has been affected by changes to a range of economic, demographic and financial factors over the past five years. Changes to interest rates, unemployment levels, income, consumer confidence and access to finance have all affected the purchasing power of companies and investors. This has affected sales volumes, property prices and rental rates, which have affected revenue growth margins.

Volatility v. Growth 1000

revenue volatility* (%)

Revenue Volatility

Hazardous

rollercoaster

100 10

real Estate Agents 1 0.1

Stagnant –30

–10

blue Chip 10

30

50

70

Five year annualised revenue growth (%) * Axis is in logarithmic scale SOURCE: WWW.IBISWORLD.COM.AU

Regulation & Policy Level & Trend  he level of T

Regulation is Heavy and the trend is Steady

The Real Estate Agents industry is tightly regulated by state and territory governments through laws governing the entry requirements and the conduct of firms and their employees. Some governments, such as Queensland, also prescribe maximum fee scales. State government legislation sets out the licensing requirements for people and corporations to provide defined real estate services. In most states, there are four real estate license categories: agent, branch manager, salesperson or subagent, and corporation. The requirements differ between states but principally cover the areas of educational qualifications, experience, character and residence. All mainland states have legislation covering land valuers. There is no valuer registration system in the Australian Capital Territory or the

Northern Territory. State governments are examining the educational and licensing requirements for agents, with the possibility of a relaxation of requirements particularly in the areas of property management, commercial property sales and business sales. On the other hand, the real estate institutes strongly oppose such moves and appear to have been largely successful in lobbying state governments against them. In each state and territory, the majority of real estate agents are members of a real estate institute, although membership is not a legal requirement to practice as an agent. The institutes, which have attracted membership exceeding 80% of all real estate agents, regulate members by imposing professional codes of conduct

Real Estate Agents in Australia  

Breakdown of industry information from IBISWorld