Australia Real Estate Services industry Performance

Over the past five years, the Real Estate Services industry has had to endure some property market uncertainty. Revenue is forecast to grow at an annualised 0.9% over the five years through 2013-14. This low growth is due to reduced demand for properties from investors, commercial businesses and home owners. Deteriorating economic conditions, rising debt levels and tighter access to finance have directly affected property investment.

The global financial crisis led to a significant fall in demand for all types of property. Some efforts were made to reinvigorate demand, primarily the progressive period of interest rate cuts from September 2008 to April 2009 and the First Home Owner Boost, which was in place between October 2008 and December 2009. While these prevented demand from dropping further, general consumer caution limited the effect of interest rate cuts and the grant only helped the industry while it was in place.

After two difficult years, the Real Estate Services industry stabilised in 2010-11, in line with improvements in domestic economic and financial conditions and growth in residential property prices across much of Australia. Growth in demand for commercial (i.e. retail, office and industrial) property strengthened property investment. However, this was offset by weakening residential demand from the beginning of 2011, as consumer sentiment towards property purchases was yet to recover. IBISWorld forecasts industry revenue to increase by 3.9% in 2013-14 to $9.4 billion. The jump in revenue is partially attributable to a drop in cash rates by the RBA.

IBISWorld expects that improvements to economic and financial conditions, and steady population growth, will drive domestic property investment over the next five years. Residential and property sales and leasing volumes are forecast to diverge, with residential demand decreasing temporarily. However, the availability of higher density residential property is expected to increase as the Construction division and governments respond to growing urbanisation. As a result, industry revenue is forecast to grow at an annualised 2.3% over the five years through 2018-19 to reach $10.5 billion in 2018-19. The industry is also expected to face greater competition from technological alternatives that allow buyers and renters to circumvent the industry altogether.