For instance, 25% fewer houses have been sold along Cape Town's Atlantic seaboard this year than last, says Sotheby executive director Barak Geffen.

Newer high-profile agencies, which have been building market share with expensive advertising, have found themselves short of cash and facing a dilemma. Either they cut advertising and return to oblivion, or they borrow against future commissions and keep up appearances in the hope that sales will increase soon.

Agency cash flow comes from sales commissions which are paid only when a property is transferred from seller to buyer - and that can take up to six months after a deal is signed. A bank will not lend an agency money against this debtors book, so companies caught in a cash squeeze must turn to lenders in the form of bridging-finance companies.

The biggest of these is Ascendant, part of the listed Jigsaw group. Its main customers are sellers, who need cash to pay costs on their new purchases before they receive money from the sale of their old homes. Others are cash-strapped agents.

"It's a bad sign when agencies turn to bridging companies," says Jan le Roux, head of PA Group, which provides a range of services to estate agents, including cash-flow bridging. "They are usually charged R40/month/R1 000 discounted - effectively almost 50%/year in interest."

He says it makes sense for the seller of a R5m home to bridge R200 000 to pay the costs on a new home for a few weeks before transfer takes place.

Agents selling for a discounting agency are also made vulnerable because half the debt the company discounts is due to them. If an agency cannot improve turnover and must continue to bridge its cash flow, it could end up unable to pay its agents.

"It's immoral but not illegal for a company to borrow against its agents' commissions," says Le Roux.

One cash-strapped agent adds: "I can't understand why banks don't advance their agency clients money against commissions. But they don't, not even when the deposit has been paid, the suspensive conditions met, the documents signed and the guarantees received."

Pam Golding Properties CEO Andrew Golding and Jawitz CEO Herschel Jawitz confirm that turnovers have fallen at the top end of the market. But rising sales of middle- and lower-priced houses are pushing up the turnovers of the large national agencies.

Neither sees a crisis for agencies and doubts that any will fail in the next few months. "It could be that some newer agencies haven't yet learnt how important it is to stick to their ratios," says Golding. "But turnovers at the upper end started rising again in November."

Adds Jawitz: "A shakeout will come eventually, but not in the current climate."

Financial Mail