The real estate industry is doing it tough. Transaction volumes last year were about 13% lower than 2010, 26% lower than 2009 and 33% lower than the recent highs of 2007. A slightly larger decrease applies to real estate agent commissions, due to the fact that agents are generally paid based on percentage of the sale price; falls in home values have compounded the pain already caused by slow market conditions.
Based on the total value of sales in 2011, which were down 18.3% compared with 2010; agent commissions are likely to be down about the same amount.
At the same time, according to the latest IBISWorld Real Estate Industry report, the number of people employed in the industry has fallen by around 1,800 over the past year after rising by 940 employees in 2010/11. The reduced number of agents suggests the commission pie needs to be cut into fewer slices, which is likely to have eased the income fall on a per agent basis. In fact, the report suggests that income per employee in the real estate industry hasn’t change a great deal over the past four years, remaining around $59,000 since 2008 after generally trending down since 2002.
For real estate agents or agencies looking for what are potentially the most lucrative markets around the country, the below table outlines the top 100 suburbs across the country based on the gross value of combined house and units sales. Clearly the level of competition needs to be assessed in these markets, however the list makes a good start.
More than half of the list shows a median house value higher than $1 million dollars, highlighting the fact that prestige markets attract significant commissions; but keep in mind that sales volumes in many of these areas tend to be lower so competition for income is generally tight.
Another interesting observation is the change in rankings over the past five years (I’ve included rankings based on the total value of sales last year, in 2010 and five years ago). Suburbs such as Kew (Melbourne),Castle Hill (Sydney) and Paddington (Sydney) have moved into the top ten; Paddington has seen the biggest shift, five years ago the suburb was ranked 27th based on the gross value of sales.
Areas of the Gold Coast have slipped down the rankings due to falls in both value and volumes, however Surfers Paradise remains in the top ten (slipping from the number two position five years ago). Hope Island is the second Gold Coast suburb to make the list at number 70 (ranked 9th nationally five years ago), while Southport is now ranked 86th after previously being the 7th highest grossing suburb five years ago.
Outside of the capital cities and Gold Coast, Port Macquarie recorded the highest gross value of sales last year and is ranked 21st (no change over last year and five years ago). The suburb of Orange has shown a surge upwards in the rankings, moving from 137th nationally five years ago to 54th last year.