Newer agents take the biggest hit while established companies drop salaries and diversify into rentals and commercial property

THE REMAX ESTATE agency has closed one fifth of its offices in Ireland in the last 12 months. Seventeen of the franchise organisation's 80 independently owned offices have shut down in response to tougher market conditions.

More than half of the office closures are complete shut downs, while the remainder are due to consolidations and mergers, according to ReMax regional director Mark Campbell.

All of the franchise shut downs were newly established businesses and two or three more closures could be expected before the end of the year, he added.

The news comes following salary cuts, redundancies and closures in estate agents around the country and is a further sign of the stalled property market.

Well-established agent Mason Gavigan in Navan closed its doors last week and another business in the same town, ERA Tehan, has also folded.

Frank Doonan, CEO of the ERA network, confirmed that four members of the network have gone out of business in the past 18 months.

"The recent downturn has seen some agents exit the estate agency business. In my experience office closures have been by more recent entrants to the business, attracted in by the hectic activity levels of the last number of years."

Estate agents are reluctant to discuss the state of the market, but anecdotal evidence suggests that many are considering layoffs as they face into the autumn season with transactions significantly down on last year.

Many agencies are cutting staff by up to a third while others are contemplating mergers in a bid to reduce costs.

Meanwhile, bigger agencies are restructuring and moving staff from new homes and residential departments to valuation and rental sectors. Angus Potterton, managing director of Savills HOK, confirmed that a couple of members of staff have left the company in recent weeks and that the firm is redirecting staff from new homes departments to busier areas such as valuations and property management.

Ronald Duff from DNG Ronald Duff said that the market has "effectively seized up" and staff cuts and closures are inevitable. "Nothing is happening. The only movement is at the lower end of the market and, when we do sell, the buyers find they can't get finance. If something doesn't give we will all be closing."

He has cut staff numbers by 30 per cent at his business in Ratoath, Co Meath, and says that other agents are tightening their belts by closing ancillary offices.

Another seasoned agent, in the midlands, told The Irish Times that no agents are covering their costs at the moment and that "the market has completely crashed".

This agent, whose staff numbers have been cut from 10 to five, said the big problem facing the sector is the fact that new developments have been frozen.

Fintan McNamara, of the IPAV (Institute of Professional Auctioneers and Valuers), says that newer agencies, many of whom have focused solely on the residential market, are most at risk.

He advises auctioneers to diversify into letting and property management. "Agents who have a broad base of business, including new homes, second-hand homes, commercial, letting, valuations and property management will weather the storm better than others."

Last month Sherry FitzGerald said that it will be cutting wages by between five and 10 per cent. Lisney announced a 10 per cent salary drop in June.