The housing market slump is taking a savage toll on real estate agencies’ revenues, with estimated commission levels down by almost a third compared to a year ago.
Interest.co.nz estimates that agencies throughout the country earned an estimated $348 million in gross residential sales commissions in the third quarter this year, down 31% compared to the same period of 2021.
In New Zealand’s largest housing market, Auckland, total estimated commissions were down 34% year-on-year. In the rest of the country excluding Auckland total estimated commissions fell 28%.
The biggest declines were in Auckland -34%, Marlborough -31%, Waikato -25%, Manawatu/Whanganui -24%, Northland -19%, Wellington -17% and Canterbury -15%.
Only one region went against the trend and posted an increase in commissions. That was Taranaki, where estimated total commissions rose 2%.
The sharp drop in commission levels over winter was mainly driven by a sharp downturn in sales volumes compared to last year and to a lesser degree by falling prices, which pushed down average commission levels.
However as the graph below shows, the big drop in estimated commission levels this year followed a boom in agency revenues, that occurred after the first pandemic lockdown put severe constraints on real estate activity in the second quarter of 2020.
That strong lift in commission levels lasted from the third quarter of 2020 until the fourth quarter of 2021, but there has been a steady slide since the start of this year.
Although the graph suggests commission levels may only be returning to their longer term norms, it still doesn’t paint a pretty picture because the decline has mainly been driven by lower sales volumes.
And in a commission driven industry, that means fewer agents getting a slice of the pie.
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59 Comments
Might need to cut back on the smashed avocado on toast.
Also, expensive suits and expensive cars too...
You've seen some in expensive suits?
Hahaha
Yes I have.
Taro Cash and No 1 Shoes sales are down
The industry is under attack.see: www.noagent.co.nz
Good! The Real Estate industry in NZ is appalling and needs a major correction itself.
REAs would have saved money in the last market upswing - if they were wise. After all, it went on for a long time.
TTP
Exactly that. Those who failed to apply that simple rule to themselves should probably not be in that business.
They can cry me a river. Or they might want to consider getting a real job in the productive economy.
Retrain into a useful productive job !
... pick apples , drive a truck , mop a hospital ward , teach the kids , recycle bottles & plastics ... do something positive for the country for a change ...
Not a good moment to fine out you don't have a talent for selling.
Mortgagee sales started, making its way from top to bottom.
Only need to find someone who is willing to invest in this falling housing market.
That one sure isn't representative. Possum P seems to be completely insane - having bought 35 London St and putting height covenants on it so no-one would touch it (seems to still be sitting there as a bare Site), paid crazy insane $$$$ for 89 St Marys Rd in 2018 in a tender (like $1m above the next highest tender) and that build at 83 St Marys has been going for something like 5 years, under a wrap. That investor definitely had a few loose screws - and clearly very deep pockets that might finally have run out. I did tell Mars I'd see them at the mortgagee auction. Finally came true...
Never heard of Virginia Clair Maxwell, but she seems to have started and closed a few companies/trusts.
I'm not much a fan of the fad these days to slap a big black box on the side of villas, though.
Money (or debt) is inversely correlated to taste. I'm finishing up some high end apartment reno's at the moment and one word: yuck.
What an appalling desecration of a beautiful old house.
Cost of Falling Real Estate Agents Commissions Payment in the near future?
Tough times selling an S model Audi on trademe right now..
The world's smallest violin is playing in the background
The music is stopping.
Beat me to it 😊
Oh no, anyway….
Many have made fortunes that will last them for lifetime, if not generations to come.
Correct
They should have taken up my offer to buy my Yaris
You should've dressed up your Yaris as a Yaris GR Rallye model and it will be snapped up!.. After all they like to show the look and nothing else..
Lol
If the agents are making less then the owner is making less.
This explains why Property Brokers in Havelock North have gone from a very Big Office, to a Medium size Office, to a Tiny Little Office . Also explains the new radio campaign recruiting new agents.
The 1.5 million dollar fine from the Commerce Commission for Illegal and Deceptive Business Practices also may not have helped.
LOL exactly. And they are just the ones who got caught.
Still not getting his teeth fixed!
All the better to chew tin cans and broken glass with my dear!
or old rusty nails
Many will have to downgrade from that Fifth Avenue Menswear's shiny blue suits and Maserati to grey (not so shiny) suits from H&N and Toyota Camry Hybrid!
Cue the violin
oh boo hoo....the only people i feel more sorry for than real estate agents, who by the way, have almost nil respect on this site or anywhere else, apart from within their own minuscule worlds, is the fools that agree to pay their fees.
🎻🎻🎻🎻
With commission running at circa 4% of house sale price...quite frankly I don't give a damn.
Take the bad years with the good and stop whining.
I find it interesting that all the comments are bagging the agents, yet I suspect most people have used one and probably even been quite friendly with them.
Nobody forces you to enlist their services. These days it's quite simple to do it yourself.
Agent alert!!
Definitely not. Just pointing out the hypocrisy. If you don't like them, don't use them. I have both bought and sold without agent involvement, and also bought and sold with an agent. Twice non standard fees were negotiated.
I've used them to sell in the UK, where the commission was a little under 1% all in. I don't think I'd be comfortable paying the going rates over here...
I have lived and worked in many countries, and to be honest my worst experience with REAs was here in NZ. It seems to be a completely different job overseas, first they need a proper qualification, then they not only open doors and walk you through houses, they pro-actively help you find the home you're after. Oh and they do answer your calls and get back to you. That will probably change over here now that the market isn't so favorable for them anymore, they'll have to care for their customers, that is to say BUYERS in the current situation.
Already I am overwhelmed with emails updating me on new property listings, sales when they manage to make them, and replies to requests for more information. The last two years it was hit and miss if I received a reply via email, within a week, within a month, or if at all. They definitely like to get you on the phone so they have a captive audience to manipulate though.
There has always been no consistency with the way agents mark properties on the listing websites. Some withdraw even though they have been sold, while some will mark them sold so they can boast about the sale. Withdrawn is never just accurately withdrawn for its own sake. Almost none mark the sales price in real time, deliberately so you can't judge the price trajectory of the local market. The lack of listed price range has always been a huge bug bear of mine, as I see it as a deliberate manipulation of the market, using the unknown to help artificially push up prices. Australia has rules around having to detail an estimated price range, and justify if the sale price is 10% above or below the range. It minimises buyer manipulation and wasting of a buyers time and money. It's one of the only things making price increases in Oz generally more reasonable compared to New Zealand.
The problem I see now is older listings being withdrawn instead of pricing to meet the market. Most still don't want to contact you back to let you know when they have adjusted the price, or contact you to see if they can negotiate a price that might get your attention. In a buyers market the agents still insist on all the movement be by buyers in a negotiation.
99.9% of New Zealand agents definitely don't deserve an ounce of pity. They have shown me they have some of the laziest customer service skills I have ever encountered, and use every deliberately deceptive practice they can legally manage. In all I see most of them as after the biggest quickest buck for the most minimal effort.
Not to mention the people who 'stage' homes and all the ancilliary nonsense we've foolishly enabled. Times are changing...saw sweating harassed looking agent running down street with his own vacuum cleaner. Let them suck it up.
Crooksters they get everyone to auction and dont give fat rats if your property dont sell , but they get there fancy suit face or car in the advert
I swear, I am so sick of that bloody awful shaggy bull poster they use in all the staging. Real estate agents have done untold damage to human-highland cattle relations.
Thanks for the humour. My dad used to keep a couple of highland cattle in the field that the gravel road to the house went through. It was very effective at keeping away Jehovah's Witnesses and the like. They were actually very docile and contented, but they didn't know that...
Funny - I was talking to an aunt about how that print is almost a horror film motif for anyone frequenting open homes and she said it was a free giveaway Nood ran about a decade ago.
Amen. I look for it in every photo now...it's the most obvious giveaway.
As unemployment rises for real estate agents they just fade away. It is not until it hits the entitled public sector that howls of outrage erupt.
Used house dealers. I'd like to see a few of them get back down to the real world with the rest of us.
Someone once told me that real estate agents are cops that didn't get enough School C subjects to join the police and it remains the worst burn on anyone I've ever heard.
I had some move in opposite me at the height of the market. They overpaid by about 200%. Every time I see them leave their overpriced house they look more stressed. Shouldn't be too long before the executive lease cars go back.
What an Einstein article.
RE agents get paid on commission, house sales are down, RE agents income is down. Smaller pie relative to number of RE agents.
When a parasite, like a leech, sucks the host dry, they lose their source of sustenance and pass on.
Economists will follow.
And then the banks.
Better times ahead.
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