carnage among agents as property sales slow
13 March 2008

The slowdown in the sales of residential property has resulted in thousands of estate agents quitting the business. The Estate Agency Affairs Board (EAAB) said that 26 000 estates agents out of the 82 000 it licenced last year did not renew their licences this year.

Nomonde Mapetla, the EAAB's chief executive, said the reduction in the number of licensed estate agents was probably due to the cooling off in the property market because of the interest rate increases over the past eight quarters and the implementation last June of the National Credit Act (NCA).

Mapetla said about 6 000 estate agents had been blocked from receiving fidelity fund certificates because of non-compliance with particular aspects of the EAAB Act.  Agents must have a fidelity fund certificate to be able to practice legally.  Willie Marais, the national president of the Institute of Estate Agents of SA, said there was consolidation in the industry.

He said the number of residential property registrations in Gauteng had declined from an average of 14 000 a month before interest rates started to rise in June 2006, to an average of 10 000 a month or less now.  However, Marais disputed the EAAB figures on fidelity fund certificates.  He suggested the board's number was a "thumb-suck" because it was "so far in arrears" in issuing certificates.
 
But Marais said people were leaving the industry, smaller firms were consolidating, smaller firms were merging with bigger firms and "one-man shows" were now joining bigger firms.  He said any estate agent who had joined the industry from 1999 had experienced only a rising cycle and would not have experienced a downturn.

"The market is tough for them, and the biggest problem is in their head and dealing with the current market," he said. "The guys who have been through the cycle adapt and remain positive and go out and look for business." The prospects for the market were dependent on interest rates.

The outlook of purchasers was to be wary, shop around and think twice before committing to buy, he said.  John Loos, a property strategist at First National Bank (FNB) Home Loans, said there was normally a proliferation of one-man estate agencies as the residential property boom gathered steam, but a lot of those people were not strong enough to withstand the cyclical downturns.  The FNB Home Loans residential property barometer last month revealed that activity in the market had declined by 15 percent in the fourth quarter of last year, compared with the same quarter a year earlier. More than 80 percent of houses were now also being sold for less than the asking price.

Roy Cokayne, www.busrep.co.za