Johannesburg — WITH residential property sales plummeting, South African real estate agencies are preparing to batten the hatches for what could prove to be a stormy next 12 months.

Larger real estate agency groups are also finding they are increasing market share as consumers prefer more established brands in these difficult times.

Andrew Golding, CE of Pam Golding Properties, says transaction volumes have dropped by at least 30% - and in some cases 50% - across the real estate industry.

"If you were selling 100 houses last year, this year you're selling between 50 and 70. That is compounded by the fact that from a pricing perspective, we've definitely seen house price growth stall. There is certainly pressure on prices. These both compound to put pressure on turnover," says Golding.

But Pam Golding Properties, which has gained market share, has not closed down any established offices. The group has a system of hubs and satellite offices with the hubs being sub-regional offices and satellites being retail branch offices.

Golding says they have consolidated a number of satellite offices into hubs during the difficult times. "We had a satellite office in Parklands, which is now being serviced out of the Table View hub."

He says they are "very confident we've increased our market share significantly" but from a much smaller pie.

"There is a flight from consumers to the more established brands. Also there is no doubt the number of estate agents has dropped. There is no question that a number of smaller operators just can't make it in these times," says Golding.

"There is no doubt the smaller operators are finding it tough. We've had a huge number of agents from smaller competitors looking to join us. Wherever we can, we are trying to accommodate them."

The group is also able to offer support to a lot of its offices. Under the Pam Golding Properties group, 50% of the offices are owned by the parent company. "We are able to offer support to these offices as a whole during tough times," he says.

But from a transactional point of view, Golding does expect the situation to improve "quite soon", particularly in the final quarter of this year.

"That is the function of two things, the fact that more sellers are going to have to, or need to, sell and more buyers are going to see value in buying opportunities. That is going to get transactional volumes going again," he says.

"From a pricing point of view, we don't expect prices to start escalating until the middle of 2009."

Golding says the group has also had a few "restructuring initiatives" where it has "mothballed ancillary initiatives".

"It's a case of needing to focus on core business as opposed to more speculative initiatives," he says.

For instance, Pam Golding Properties has curtailed its expansion plans in the fractional ownership market, which is a leisure market and is subject to the stress being experienced in the leisure sector.

Samuel Seeff, chairman of Seeff Properties, says there is a "focus on the part of the consumer to look at bigger brands in this market place".

Seeff says this is because of the belief that "the bigger brands will be able to provide service in a far slower market".

He says banks and originators have indicated their home loan turnovers are down 50%.

"I think that is indicative of the residential market as a whole. In our year to date, sales volumes are down 37%, indicating that we must be taking market share because the rest of the real estate market is down about 50%."

He says there has been a lot of consolidation in the market place, indicated by smaller agencies and offices closing up and moving towards larger established companies.

"My understanding is that at the height of the market before the National Credit Act (June last year), the number of registered estate agents stood at 82000. "Currently, my understanding is that there are about 55000 registered estate agents, which is a significant fall, with more to follow."

He says this where the dominance of the larger brands is reflected. "In general, what we as a group do is to encourage our licensees to cut overheads as far as possible, bunker down and work through the next 12 difficult months."

He says the real estate agencies are based on a "fair degree of variable income which we can't control. The only way to survive is to ensure overheads are kept at a minimum. Seeff, with its small head office infrastructure, is able to combat these times a lot more successfully than many other groups."

Bill Rawson, chairman of Rawson Properties, says his group will expand noticeably throughout the "current downturn in the property market".

"Every recession - and the current one, in my view, is more severe than that of 1998 - opens up new opportunities. Some will always react to a downturn by going into hibernation, downscaling and retrenching, but in our experience those who follow this route often struggle to get back to their previous position.

"At Rawson Properties, we are determined to remain confident and aggressive so we are going out and focusing on the setting up of new franchises."