Just over 600 real estate salespeople have left the industry over the year to March as the housing market slump bites into agency commissions.
According to the latest figures from the Real Estate Authority, the statutory body which regulates the industry, the number of people with active licences either as salespeople or agents, declined from 15,415 at the end of March last year to 14,808 at the end of March this year, a reduction of 607 (-3.9%).
There was also a slight reduction in the number of active real estate company licences, which declined from 906 at the end of March last year to 895 at the end of March this year.
This year has seen a dramatic reversal of fortune for the real estate industry with the decline in licence numbers coming after they hit an all time high in 2022.
There has also been a spike in the number of licence holders choosing to suspend their licences, which means they are no longer working in the industry but could return at a later date by renewing their licences.
"In the period 2020-2022, REA saw a surge in new licence applications as more people entered the real estate profession during the hot real estate market and when other industries had slowed in response to Covid-19 conditions," the REA said.
However, the slump in housing sales over the last 12 months had made market conditions much tougher.
"This is a tough market with low stock, reducing prices, increasing interest rates and cost of living challenges," REA Chief Executive Belinda Moffat said.
Interest.co.nz estimates that the total gross residential sales commissions throughout the country declined from $457 million in the first quarter of 2022 to $317 million in the first quarter of this year.
That's a decline of $140 million (-31%) in industry revenue in the first quarter of this year compared to the same period a year ago.
Compared to Q1 2021, estimated commission revenue was down by $277 million (-47%).
The decline in commission revenue was particularly severe in Auckland where it was down by 40% in the first quarter of this year compared to a year earlier and down by 58% compared to two years ago.
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70 Comments
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Not at all surprising for a cyclical industry during a downturn.
No doubt some ex-REAs will now be selling used cars, vacuum cleaners, homeopathic remedies and so forth - exploiting their generic "skills".
TTP
Praying Mantis begins devouring its own.......
Thats what traders of any financial commodity do poppy.....
How sad never mind ....
A few years back I used to go to open homes
I’d ask the agent what price they were expecting
They’d say early, mid, late this or that amount etc
I’d say ‘really, for this place’?
Sometimes I would say “I think the more you cook the market, the more likely it is to burn at some point, wouldn’t you rather slow growth but lots of transactions and commissions”
Normally they didnt understand my point or often said something like “we can’t get enough listings, that’s our only problem”
Well, they solved that problem
That’s very noble of you, but the world and global real estate doesn’t work like that if you haven’t noticed yet. This is all cyclical in saying that, the top agents are still around and survive these times.
The world just doesn't work like that period. If you're selling a product for a living, no matter what it is, you're going to try to get the best price for it. For those who are employees and struggle to understand this, it's the same with your wages, you're not going to say "no please don't pay me this much, pay me less". It's just that we're very one-eyed, when others try to earn more, we frown and consider it preposterous, when we do it, it's of course fine.
Turnover can compensate for a lower unit markup. Look at the Warehouse.
The average estate agent fee in the UK is 1.18%+VAT (1.42% inc VAT) for a sole agency agreement, according to TheAdvisory.
What I have noticed about global real estate is that many countries don't pay the ridiculous fees we do.
Though, in the US they pay double as they often use a buyer's agents.
Will be interesting to watch the market over the 'fee famine' years of the cycle to see if some change their model etc
I’d ask the agent what the selling price was and they would say, while leaning against the bench, “just have a walk around and then tell me what you think”. They had no clue.
And nobody noticed 🖕
Yet the fat cat " franchise owner" says goodbye staff as he goes to pick up his new Audi .
good riddance
REA's are the bane of my existence.
-SMG.
Those that stick it out and make ends meet in times like this will do well in the long run.
Hi nktokyo,
Those that stick it out and make ends meet in times like this will DO WELL in the long run. [emphasis added]
"Do Well" at what? Misleading and deceiving people?
Do REAs ever "Do Good"? Not likely......
TTP
The commission structure of the RE cartel is shocking
The franchise owner get 50+% of every sale for owning an office and a secretary.
And paying to rent an office, indemnity insurance, marketing etc.
Isn't that much as a percentage. 95% of marketing now seems to be online and trademe.
The 20% of agents selling 80% of the houses get a much higher split than that.
Most agents will be on at least a 60/40 split up to 80/20. Take out of of that costs etc and most businesses will run on a circa 10% margin. PM book is where the cashflow and exit is
Ouch.. 4% is a bit of a drop.. I assume that will only increase this year
"You can't play in the man's game, you can't close them—go home and tell your wife your troubles. Because only one thing counts in this life: get them to sign on the line which is dotted."
- Blake. Glenngarry Glen Ross
Cartman: Mom, what job could you possibly have, you don't know how to do anything?!
Mrs. Cartman: I'm a real estate agent
Could apply equally to most politicians
A lot more will exit over the rest of the year. The good ones are still busy, the pretenders are...not.
A lot of them will find it hard to get a decent job through having a lack of education and talent. That is why they were agents in the first place. They are vastly overpaid for what they actually do.
Is that why you're no longer an agent, Ex Agent?
Never was one. I would be too embarrassed to be one.
What's in a name? I'm "Retired Poppy" yet I choose to work full time.
Ex agent, so you think you can troll others by saying that you're an ex agent when it suits you, but then deny it, even though it's your name (you chose it). Yeah right, pull the other one Ex agent.
Does your pseudonym reflect who you are? Are you an evil person. I presume you are not evil notwithstanding a lot of your incessant comments tend to portray you as being a nasty person.
he is not a meteorologist ...
lets just drop this kids, lets just bath in the demise of real estate commisions.
The problem with your name, if you've never been an agent, is that it's fake and disingenuous. You chose that a name to make others believe you used to be an agent, and that you have insider knowledge of how agent operate. (read how nasty they are).
As for my name, it's not evil, it's Yvil, a nickname my friends gave me a long time ago, based on my first name.
I did a four year degree and worked in a profession for 30 years. While doing that I dealt with agents at times. That’s how I know how they operate. I reiterate I would be embarrassed to be one. They are down there with politicians and car dealers.
So tell us, why did you call yourself ex agent?
He could be 007 or a spy that came in from the cold, does anyone really care ?
This has really triggered you...... I would try focusing some something actually important, deep breathing. Happy hoour starts in 42 mins at 4pm , pop a tramadol now and report back at 6pm
I suspect Yvil is an agent as he has really centred on my pseudonym. It’s just a name. The topics are far more important than pseudonyms.
the number of people with active licences, declined from 15,415 at the end of March last year to 14,808 at the end of March this year, a reduction of 607 (-3.9%).
It would be interesting to know how many licensees there were, before Covid.
This might help....
Perfect, thanks RP. I'm surprised the amount of RE licences didn't increase much at all over 2021-2022.
As usual, during the downturn cycle the small players realise they actually don't actually have the skills to close deals so they walk over to the departure lounge.
Very true Mr Frank. Plenty of salespeople have made a crazy amount of money over the last 5-8 years without truly being tested or having the skills required when the going gets tough.
Plenty of salespeople have made a crazy amount of money over the last 5-8 years without truly being tested or having the skills required when the going gets tough.
So they're smart. ROE - Return on Effort. Make hay while the sun shines.
Amyone can sell water in the desert.
Try seĺling sand
Is this a real job really? RE agents.
Any crook would be a great RE agent as they lie through their noses.
We teach our kids that do not lie. What do RE agents teach their kids as they lie for a living.
Bluffing the vendor with a high estimate to sign the listing is the first sale. In a declining market its a much tougher road to actually realise that and get paid for the sale..
I find it a despicable character trait, to revel in other's misfortune.
Misfortune....stop it. This is far less of a misfortune than first home buyers being unable to enjoy the security of home ownership because of the ponzi behaviour of the sector. There is plenty of other work out there...
Sure, but two wrongs don't make it right.
Articles like this serve no purpose rather than to gather the gloating masses to the comments section.
Even the romans understood the value of bread and circus
Yes it’s not a good character trait. Neither is rank hypocrisy.
Nor is stinginess
Who’s stingey?
I think I have made it clear why I don’t donate here, and it’s nothing to do with stinginess.
It’s everything to do with the tolerance shown by this website for trolling and bullying, things that the website’s own commenting policy denounces.
Sort that out and I would donate.
After all, it’s the comments that I and many others come for, more so than the articles.
(PS I have donated in the past)
A sign of a more productive economy, stacking shelves or even just consuming popcorn on the couch is more productive than what 'Real Estate Agents' claim to do.
This is a very bad time to figure out you can't sell. Surviving a contraction as a salesperson is savage. Only those with the brightest smile, whitest teeth, bounciest step, smoothest presentation etc. will survive. The world is not a meritocracy.
Left the industry, or gone into early retirement? LOL
Frank always needs workers down on the docks, hopefully these folk are going to help fill the labour shortages across wide range of industries such as hospo and aged care.
The pipeline.
A big decline in the first group that is closest to the coal face of a declining market.
Next step is those that are a degree away - this will be architects, designers, surveyors and so on.
Next will be the builders, electricians, plumbers etc and materials supply side.
One step at a time......
True. We probably don't have the same stats for architects, planners. It'll be interesting to see next lot of building consent application figures.
https://www.stats.govt.nz/information-releases/building-consents-issued…
Just looked at BCs issued and there certainly looks to be a severe downward trend emerging.
REs may continue to be quite busy because there looks to be increasing number of properties for sale. Maybe not as profitable but still work there to keep them busy.
Talking to a construction PM friend in the weekend. He has about 6-8 month on the current project and then its a fast retreating pipleine. All he is hearing is all engines stop signals.
Plenty of vendors willing to list if they could get last years prices...... this is going to cause issues, too many House shops on the high street paying high rents
I've said it before and I'll say it again - www.suzuki.co.nz
not sure i understand all the hate on REAs. I reckon the good ones are worth their weight in gold.
It's almost as if some on here blame them for the property bubble that's now bursting. REA's are not to blame, it's cheap money, overseas money and kiwi mum and dads that believe property is the only game in town so they need to help their kids into property regardless of the price. Oh yes, the banks should share some blame too for allowing reckless lending.
Anyway, chickens are coming home to roost . . . . and we are just getting started. Watch for an US equity crash in the next couple of months, this time no dropping interest rates due to sticky inflation. Coupled with a banking crises and some ugly geopolitics, this thing gets really messy by about September 2023.
As the vast majority work for the seller, they could be a contributing factor in how much prices rose. If they were instead working for the buyer, then agents would be trying to get better deals for the buyer. They are experts in their field in term of extracting as much as they can from the buyer.There was so much spin and FOMO created over the last three years.
Fantastic
Now they need to bring there commissions back to reality.
Why have kiwi let this get so far out of whack.
Until we get a big overseas budget player in NZ, I can't see it happening. Many do it part time, so only need to sell a few houses to make it worth it.
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