The real estate industry's fortunes improved in the second quarter of this year, with estimated industry revenue from residential commissions up 5.4% compared to the same quarter of last year.
Interest.co.nz estimates real estate agencies nationally earned around $398 million in gross residential sales commission in the second quarter of 2023.
That was up by $20m (+5.4%) compared to the second quarter of 2022.
That is still well down on the estimated $592m the industry earned in the second quarter (Q2) 2021 during the last housing boom. But it's slightly ahead of the estimated $391m earned in Q2 2019 prior to the outbreak of the Covid-19 pandemic.
Essentially this means industry sales revenue has now returned to pre-pandemic levels. (See the graph below for the quarterly trend).
However, there were significant regional differences with the Auckland market in particular remaining soft.
Estimated gross commission revenue in the Auckland region was down 10.6% in Q2 this year compared to Q2 last year, even though the number of properties sold was almost unchanged. That suggests weaker selling prices in Auckland pushed down average commission levels.
In other main centres the estimated commission revenue in the Wellington Region in Q2 2023 was up 6.7% compared to a year ago, while Canterbury was almost unchanged.
Overall, most agencies are probably relieved the slide in revenues occurring after the market came down from the 2021 boom appears to have been arrested. But at this stage they probably aren't seeing much change in their commission revenue streams compared to pre-pandemic levels, unless they are gaining or losing market share to or from other players.
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32 Comments
Disagree
because... you don't like what's being presented?
Sorry brief comment when read headline! My point was that whilst leading agents have done ok in the last year (still under pre covid) a lot of others haven’t and numbers are still way down across the board
My grandfather was a wise and perceptive gentleman. Decades ago, he proclaimed that the western world would be a better place without land agents (as they were then known), used car dealers, stereo (i.e. hifi) and vacuum cleaner / encyclopaedia salesmen.
Grandpa was correct…..
And, sadly, nothing has changed - except that the Internet has beat the encyclopaedia salesmen into submission.
TTP ☹️
Your grandpa was a wise man... Avoid RE Agents, especially if his name is Timothy... Neve trust Timothy!
There is actually a Red Flag above Timothy, if that was not already enough warning !
Alas, Chairman Moa and Hawkes Bay, it appears that you’re less virtuous than my beloved grandfather. 🤨
TTP
Your grandfather would have been very angry of the news that some RE Agent had been warned of Money laundering practices!
These legally allowed lying, manipulating and scam agencies have made so much money in the last two years that none of them need to worry about working for next 20 years.
If they are crying, it's all crocodile tears.
How can we let this manipulation keep going is beyond my comprehension. Totally corrupt and governments are hand in glove with them.
Potentially libelous comment deleted. -Ed.
It's same with that agency in every region. It's their modus operandi.
Nguturoa, please tell us how many properties you have bought and sold in your lifetime, so that we can understand better where your hate and condemning of RE agents comes from. Thanks.
Hi Yvil,
I doubt that Nguturoa has bought and sold as many properties as he would have us imagine......
I understand he's been on home detention. 😡
TTP
My experience or the experience of one's giving up votes?
So none?
If that's the case, don't you think you should not judge another profession you don't know?
100% and the spouting from the industry is so predatory. How they haven't been investigated for financial advice or manipulation is odd. Any other market or industry, with that type of behavior would be stamped out relatively quickly.
There is a giant elephant in this country and we all ignore it like it's the family cat. It's negligence on grand scale
Excellent news
Rip it up, cool down....
Everybody have fun tonight
Everybody Wang Chung tonight..
they raised commission percentage. that's why.
I believe the data is based on transactions multiplied by an assumed commission, rather than being actual measurement of commissions.
Is it true that commissions have risen? I'd have thought the increased competition driven by lower volumes would drive it down. I'd certainly be negotiating hard if I were selling.
Hey ChatGPT write an article that will rile people up.
So how about we mandate the commission factor at 20% flat and all transactions have to pass through a Registered Real Estate Agency?
Buying/selling property is a zero-sum game = There is only a finite amount of money (usually Debt) to finance the transaction, and the more the friction costs eat up of that amount (RE fees; lawyers; building inspection etc) the less that is left to actually pay for the property. i.e. prices have to fall to get a deal done.
Especially on the Vendors side, who often have a mortgage to discharge. And the more that goes to the transactors, the less can go to the bank - more so if it is a heavily leveraged property - and at some stage the bank will say "I'm sorry. You can't sell at that price, as it won't clear the mortgage. You'll just have to keep paying your Debt to us off until there's a lesser amount owning"
Pretty much one billion dollars of pure inflationary costs for the housing sector each year - simply on realtor fees.
Imagine a world where Real Estate agents could only bill for hours worked @ $60 or $70 per hour. The screaming and wailing from the sector would be deafening.
High time that the sector was limited to a per capita number of agents/licenses and also a complete reimaging of the commission structure.
For instance, in 1980 I'm guessing that the commission on a median home would have been $800. In 2023 money, taking into account inflation, that would be $4,724.00 today. Compare this to the current commission on a median home ($780k) which is around $26,465 incl GST. That is quite the pay rise for a service that has become infinitely easier to do.
RE commissions back up to pre-pandemic levels
This does not reconcile well with the constant reporting of sales being in the doldrums.
thats the bit I do not understand either..... on rereading they mean almost back to 2019 levels not the heady days after that.... 2019 was slowing as people could hardly afford to pay more then interest rates halved......
Prices are still well higher than pre-pandemic, cancelling out the lower volumes.
Yes, if prices are up 20% and volumes down 20% then that will cancell out (approximately) any drop in commission. $400 million is still a massive amount, and I don't see many agents selling their Audis or BMWs.
BMWs and Audis are no longer in vogue.. Tesla is in now!
Tesla is too common. Electric Mercedes, BMW, and Audi are for the REAs who want to stand out from the crowd!
They’re all scum IMO.
Seriously… $30k to attend a few open homes and fill out a standardised S&P agreement…
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