TDSR impact on property agent's income more than 30%!

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TDSR has impacted on the property transactions in Singapore and property agent's income has been affected by more than 30% from the cooling measures.

Here is the first 3 para of the analysis:

In the last few weeks, we have been receiving a series of bad news from the Singapore property market – specifically how property transaction volume has dropped.There was also news on how some of the property agencies have not been making money and some industry stakeholders are expecting some agents to drop out of the industry as their expected income has dropped considerably.

Quite often, we get caught up in the hype of the headlines, of how good or bad the market is, and forget that beyond the headlines are individuals who try to make a living brokering property deals.The last time I wrote about how much property agents earn was in Jun 2012. Back then the property market was still bullish and property agents were making good money. The Singapore property market has changed a lot since then and I wondered how the lacklustre market, especially after the introduction of TDSR, was affecting property agents.

A recap of the pre-TDSR market – commission solely based on property transactions (rental deals excluded)


To recap, based on the caveats lodged with the Singapore Land Authority (SLA) in 2011, the number of private residential, commercial, industrial and resale HDB transactions were about (1) 32,903, (2) 1,411, (3) 2,241 and (4) 22,683 respectively.

Based on these transactions, the total amount of property transactions for 2011 worked out to be about $68.76billion.Based on the commission rate of 2% for HDB and 1% for the rest of the property types, the total commission generated by the real estate industry amounted to about $785million.Based on an agent population of 34,300, the average commission each agent received was about $22,873.Based on Pareto’s “80-20” rule, the top 20% of property agents made an average commission of about $91,493 annually, while the rest made an average of $5718 annually.Rental commission was omitted due to the lack of information.

How different is today’s market?

To give a sense of how the market is doing, I have taken transaction figures from Oct 2013 to Oct 2014.The comparison between the two time periods is shown in Figure 1.Based on the same commission rate of 2% for HDB and 1% for the rest of the property types, and the omission of rental commission, the total transaction commission that agents should have earned in the last 12 months is estimated to be around $463million (which works out to be a drop of about 41%).
 
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