Real estate layoffs inevitable
Updated: 2008-10-15 06:59
By Raymond Ho(HK Edition)
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Before homeowners get depressed about falling home values and rising mortgage costs, know that some estate agents are destined to lose their jobs.
Last week, real estate agencies Centaline, Midland and Ricacorp tipped off that up to 1,000 "underperforming" estate agents will be out of job in the coming months amid the housing market downturn.
The credit crisis and the financial tsunami it triggered have forced local lenders to raise mortgage rates.
In September, property transactions filed with the Land Registry totaled 7,369, of which the numbers of new-home and existing-home sales were 200 and 4,000, respectively. Both figures are their lowest so far this year.
Home prices are heading nowhere but south. Average prices in popular neighborhoods fell by about 10 percent from the first quarter. The luxury sector was the worst hit.
According to the Estate Agents Authority, the number of licensed estate agents as of September was 25,134, a surprising increase of 8 percent over August. By quite a contrast, the average monthly transaction volume between January and September has declined 10.3 percent to 10,891 from last year's monthly average.
Some cautious homebuyers may choose to rent until the property prices bottom out.
This helps make room for a better leasing market, alas, and should help warm a small portion of estate agents to survive an ice age.
However, if home sales continue to slide to post-9/11 and post-SARS levels, meaning 5,000-6,000 deals, in the months ahead, then it is inevitable that 10 percent, or more than 2,000 agents, will be laid off by their employers.
It came pretty close in August, with only 6,402 deals sealed.
Bear in mind that August closings mostly reflect the market sentiment a month or two before signing on the dotted line. The real effect of the financial meltdown and dramatic changes in the housing market in September will be better reflected in October and November figures.
Already in their icy winter, Shanghai's estate agents have trimmed their fat over the last two months. At the market's height last year, there were about 12,000 branches all over the city, but now nearly half of the branches and agents have been slashed.
In the first half, some 70,000 secondary home transactions were recorded in Shanghai. Statistically, fewer than one deal was closed by a branch during the first six months, meaning some locations sold no properties for months at a time.
The author is deputy managing director of Vigers Asia Pacific Holdings.
(HK Edition 10/15/2008 page3)