Local property agency cuts commissions
24/10/2003 14:39
As of October 1, a heavy blow has been dealt to the Shanghai property
agency market from the greater than 40 percent cuts on commissions collected by
local housing agencies, the Wenhui Daily reported yesterday.
According to the
new standard issued October 1, housing agencies collect just 1 percent (compared
to 3.5 percent previously) of the trading prices from both property sellers and
buyers, and 35 percent of the monthly rentals from both lenders and
leaseholders.
Large housing agencies with more than 150 outlets, such as
Century 21 Real Estate and Cheer Home Realty, have to reduce the number of their
outlets in order to reduce costs and improve their service
standard.
Mid-sized agencies with 20 or 30 outlets are facing larger risks,
and have to seek new sources of income.
Some small agencies are likely to
face bankruptcy due to poor reputations and fewer housing resources.
"Some 30
percent of housing agencies will close in the coming one year, with part of the
agencies turning their focus from second-hand property sales to the property
leasing market," said a spokesman with www.5i5j.com, a home sales and leasing
website.
Some agencies will even buy low-priced new homes and sell them to
the second-hand market in order to make up for their losses in commissions, the
spokesman said.
The new policy will drive up the number of second-hand home
buyers, with trading volumes expected to grow by 15-20 percent in a short run,
said an industry analyst.
Service competition among local housing agencies
will replace the previous price war, the analyst said.
Wendy Zhang/ Shanghai Daily news
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