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Daily Mail
4 days ago
- Business
- Daily Mail
EXCLUSIVE Real estate agents getting rich on Australia's housing crisis is a 'kick in the guts' for struggling households
Experts say real estate agents getting rich on the nation's housing crisis is a painful 'kick in the guts' for struggling Aussies - as calls are renewed for the industry to be subject to stricter regulations. According to property comparison site, bRight Agent, a Perth home worth $1million in 2020 would be worth roughly $1.7million today. This means a real estate agent charging a two per cent commission would today earn $35,200 compared to $20,000 five years ago. While Perth's property market is an outlier, all major Australian cities have seen significant growth in the past five years. Aaron Scott, who co-founded the comparison service, said homeowners shouldn't be expected to pay agents so much more for the same amount of work. He told Daily Mail Australia that while agents deserved to be well-paid, the flashy wealth of the top earners is a 'kick in the guts' amid a worsening housing crisis. 'Let's face it - the extravagance often seen in the real estate industry, whether it be designer clothes, cars, or partying on yachts, is done on the backs of Australian families who are trying to keep up with their repayments and keep a roof over their heads,' he said. 'We don't think that Aussies should be forking out an extra $10,000, $15,000 or $20,000 in costs to sell their home, just because the property value has increased. 'Aussies work really hard for the equity that they put into their homes over the years, so it really doesn't make sense that selling costs increase at the same rate.' Mr Scott said it was worth asking whether commissions should be regulated at an industry level, in the same way the states restrict the movement of rent and bills. 'If we're good enough to regulate the rate of increase of rents... shouldn't we be good enough to regulate the increase of selling costs?' State and territory governments have previously capped the commission an agent could charge for residential property transactions. Queensland was the last state to deregulate, having only done away with its cap of 2.5 per cent of the purchase price in 2014. While it is difficult to calculate the impact of deregulation on commissions, the Real Estate Institute of Australia insists it has allowed agents to lower their fees. 'Commission rates in Australia have been deregulated for many years, and this has created strong competition in the industry, which has helped bring fees down rather than push them up,' a REIA spokesperson told Daily Mail Australia. 'Agents now work in a highly competitive environment where many charge well under 2 per cent, and in some metro markets, even below 1 per cent. 'While some regional areas still see rates around 3 per cent, those cases are the exception rather than the norm.' But others tell a different story, including former agent Neil Jenman who claims commissions soared as agents were left to negotiate their own fees. 'When real estate commissions were fixed in the early 90s, the real estate industry convinced governments across Australia to deregulate the commissions on the basis that they would fall,' he told Daily Mail Australia. 'Of course they all giggled when the governments fell for it, because real estate commissions soared.' Mr Jenman claimed commissions in certain parts of western Sydney had surged by roughly ten times since he practised there about 30 years ago. 'When I was an agent, my average fee per sale was $3,500 (in 1995). Today, in the same area, the average fee is $35,000,' he said. The spoils are not evenly spread among real estate agents, with the millions raked in by top earners well outpacing the average salary of between $75,000 to $95,000. Neither is it clear whether increasing saturation in the job market has reduced the number of sales agents are securing, as suggested by a CoreLogic spokesperson. But many, like Mr Jenman, think the fees charged by agents should be more closely tied to the work they put in, rather than simply the value of the sale. 'Some agents in Australia who are selling one house a month (a pitiful performance - less than eight hours 'work') are earning a million dollars a year,' he said. 'There's an agent in the eastern suburbs who boasts that he doesn't get out of bed for less than $100,000 commission per house. 'There is more money in real estate than in drug dealing.' Simon Murphy, a former real estate agent and founder of Melbourne Property Advocate, agreed, saying the commission system is 'broken'. 'The problem's not just how much agents charge. It's what they actually do for that money,' he told Daily Mail Australia. 'Agents throw the property online, run a couple of open homes, pass on some feedback, and somehow walk away with twenty grand or more. 'They're not really selling. They're just listing. That's not strategy. That's admin in a suit.' Mr Murphy acknowledged negotiating is a valuable skill but said too often agents were refusing to do the heavy lifting, relying on Australia's strong housing market. 'Most (agents) are just middlemen cashing in on a system that hasn't changed in years,' he said.
Yahoo
08-07-2025
- Business
- Yahoo
Shock blow for Aussie mortgage holders
Australian households will have to wait a little longer for more mortgage relief, with slowing inflation and weak retail sales not enough to sway the Reserve Bank that the fight against rising prices is over. A cautious RBA has held the official cash rate at 3.85 per cent in its July meeting, with the shock move defying expert commentators and the money markets predictions. Prior to Tuesday's announcement, the money market had placed a 92 per cent chance on a rate cut off the back of weaker-than-expected economic data. Mortgage holders will now have to wait until August at the earliest to get further interest rate relief. bRight Agent co-founder Aaron Scott called the surprise hold a 'cruel blow' for millions of Australian homeowners. 'Despite the fact that a July cut would not have been enough to give most mortgage holders a meaningful reprieve, it would have been welcome by the millions of Aussies who are holding out for more cost-of-living relief,' he said. 'Nobody will be breaking out the Wagyu beef or shiraz. 'The real question is what do the big banks do. Do they still pass along lower rates to mortgage holders? 'Do they stop cutting savings rates for those with savings deposits?' The RBA Board said while inflation was falling, it wanted to wait for a 'little more information' before moving on rates. 'Uncertainty in the world economy remains elevated,' the Board wrote in its statement. 'While the final scope of US tariffs and policy responses in other countries remains unknown, financial market prices have rebounded with an expectation that the most extreme outcomes are likely to be avoided. 'Trade policy developments are nevertheless still expected to have an adverse effect on global economic activity and there remains a risk that households and firms delay expenditure pending greater clarity on the outlook.' The Board also said domestic factors had played a role in its decision, including a gradual recovery in household incomes and an easing in some measures of financial stress. 'There are uncertainties about the outlook for domestic economic activity and inflation stemming from both domestic and international developments,' the Board said. 'There are also uncertainties regarding the lags in the effect of recent monetary policy easing and how firms' pricing decisions and wages will respond to the balance between demand and supply for goods and services, tight conditions in the labour market and continued weak productivity outcomes.' The statement concluded by saying the Board judged it 'could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis'. The Board voted 6-3 in favour of the hold. Tuesday's announcement follows a rate cut in May, with the central bank opting against back-to-back movements in the official cash rate. REA senior economist Anne Flaherty said Tuesday's hold could depress price growth in real estate moving forward. 'Today's decision to hold may slow the pace of price growth seen in the months following the February and May cuts,' she said. 'Nationally, prices are up 3.2 per cent since the start of the year, adding around $26,000 to the median price of a home. 'For many, affordability constraints continue to weigh heavily, as many households grapple with stretched budgets.' VanEck head of investments and capital markets Russel Chesler said markets were getting ahead of themselves and changes to monetary policy takes time to unwind. 'Markets seem to be throwing caution to the wind with their expectation of two more cuts this year, implying further falls in inflation and a softer job market,' he said 'The unemployment rate has remained steady at 4.1 per cent, which is close to historical lows, and there are no signs of this changing.' Ahead of the announcement, Betashare chief economist David Bassanese said the 'case for a rate cut had not been established.' 'Although May trimmed mean annual inflation dropped to 2.4 per cent, this followed a solid 2.8 per cent gain in April – and there's every risk it could bounce back again in the more comprehensive and reliable June quarter CPI report later this month,' he said. 'Prudence suggests the RBA should and would await confirmation of lower inflation in the quarterly CPI report before cutting again in August – despite the market pricing a rate cut next week with near certainty.' Deloitte Access Economics head Pradeep Philip, meanwhile, said major institutions had lowered global growth forecasts on the back of trade uncertainty triggered by US President Donald Trump's tariff moves. 'Over recent months, the World Bank, the IMF, and OECD have all lowered global growth forecasts, primarily based on trade uncertainty,' he said. 'We are now in a world where geopolitics is driving economics.' He argued a rate cut would have been a 'sensible move akin to taking out insurance to support the Australian economy by helping rebuild business confidence to drive investment'. 'Domestically, with inflation continuing to come down and government spending still supporting the economy, our biggest economic challenge remains boosting business investment to lift productivity. This provides a clear case for the continued easing of monetary policy,' he said He reiterated Deloitte's expectation of a further 50 basis points of rate cuts for the remainder of 2025 and then another 50 basis points in 2026. betashares chief economist David Bassanese predicted the RBA would keep rates on hold. 'As I have consistently argued in recent weeks, the case to cut rates today was never compelling,' he said. 'While consumer spending remains stubbornly weak, the labour market remains strong. 'And while the recent monthly CPI report showed a large decline in annual trimmed mean inflation to 2.4 per cent, monthly reports are notoriously volatile. Only the month prior, trimmed mean annual inflation was at 2.8 per cent. 'To my mind, the RBA would wait for the more reliable quarterly CPI report later this month to confirm a decline in underlying inflation before cutting rates again in August.'
