There has been no growth in the real estate industry's residential commission revenue over the last year, but considering the state of the economy and uncertainties in the housing market, it's probably faring okay.
Interest.co.nz estimates real estate agencies throughout the country earned around $399 million in gross residential sales commissions in the first quarter of this year.
That was up 26% compared to the first quarter last year, although that was a particularly bad quarter for sales and the commissions they generated.
Total commission levels are still well down from the halcyon days of 2020/21, when total commissions soared to a peak of almost $700 million in the fourth quarter of 2020, and were above $500 million for six consecutive quarters.
But what is surprising about the latest commission estimates is how remarkably flat they have been since the second quarter of last year, hovering just either side of $400m for the last four quarters.
The graph below shows estimated quarterly commissions going back to the first quarter 2018. What this suggests is industry commission revenues over the last year have stabilised around what was the upper end of pre-Covid levels.
With no revenue growth for the last 12 months and an uncertain market outlook for the rest of the year, it's likely that agencies are focused on sharpening their competitive edge and keeping a tight rein on costs.
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63 Comments
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Big Money Energy
(or not as the case would seem)
As this market corrects, turnover will surely increase along with commissions and a more sustainable floor and price recovery can be called. There's every indication this process/adjustment is evolving into a more forceful one as we progress through 2024. This is the adjustment that we needed to have, yet the many in denial tried and are still trying every trick in the book to keep the party going.
Falling prices is cold comfort to late arrivals, often innocent victims of heavy handed Spruiking.....
As this market corrects, turnover will surely increase along with commissions and a more sustainable floor and price recovery can be called.
Really? Where do you buy your tea leaves?
Granny Herald ran an article today about official valuations that mentally solidify the prices that the boomers expect not being up to expectations, therefore people are not taking their 'savings' to market.
This kind of DGM content from Granny will likely result in howls of protest from its audience.
https://www.nzherald.co.nz/nz/tauranga-city-council-revaluations-woman-…
I've paid my taxes! The government needs to protect my wealth!
Why doesn't the Council just tell prospective buyers to take on more debt so she can get a flasher retirement unit?
Yes, that is the kind of quality investigative journalism we will soon see on the 6 o'clock news. Trot out the wailing grannies who cant retire because Bad Council Algorithm reprices house.
Not to mention the misinformation being disseminated by implying that Council valuations determine rates amounts. They don't, they are used to apportion rates amongst households, not determine the dollar figure (which is set by dividing the total annual Council budget amongst households in the rating area).
Its a great example of why nobody trusts media in NZ
How about some decent long running stories digging deep into on the stuff that matters... eg the lack of infrastructure investment... police salaries... what skills do our immigrants have that add value...
Trying to create stories based on opinions of a single individual in a country of 5m ... where hardly anyone can emphasize or care .. and where their problem stems from personal choices made right through their life.... shows a lack of any real courage to dig and to care about nz.
If anything run stories on people who did work hard, set up export businesses and succeeded or failed but who did it for the team and who understand the importance of not blaming everyone else or thinking of themselves as victims. Then we might all fight for the retention and funding of news.
Agreed. We pay more tax than ever. Gst at 15%, lack of tax bracket shift means min wage is close to the top rate. If the money is not reaching police, health, education, defense and health, then were does it all go...?
The retirement village could take some of this pain... or the "villa" remains unsold....
Its the same sandwich for everyone , its just the thickness of the filling
Ryman comes to mind. Their "sticky high" pricing regime comes at the expense of shareholders (YTD -25%) As we are firmly in HFL, sooner or later, something has to give. They still seem to think they can price the market. It's now more like the other way around.
https://www.thepost.co.nz/business/350184312/ryman-caught-property-slum…
You'll notice CEO Richard's genuine and warm smile, he still banks 1.6m pa.
The level of entitlement from this woman takes some beating.
however I would offer that she should:
- work harder
- stop eating avocados
- get rid of sky tv
- stop buying fancy gadgets
- don’t go on overseas holidays
- don’t eat out
- look further afield for her first retirement home. Probably better value in the regions. She could retire to Invercargill or Stewart island instead.
feel free to add your own boomer tips for boomers
I wonder if she's thought of working in Australia for a few years just to set herself up for retirement. Sometimes house prices mean you have to delay your life plans a little.
Obviously partying and taking drugs every weekend. Get a haircut and a real job.
you guys are being a bit hard, let me negotiate on her behalf with the retirement village..........
Also some basic mandated budgeting classes and job interviews she is forced to attend or else her pension gets cut.
How about she consider the range of numerous affordable retirement providers in the area instead of just the most luxurious one
Oh and a little education in how the rates relate to CV. How they literally can and do increase regardless of whether the neighbourhood CVs goes up or down. How the CV is not the same as an individual house & property valuation. You know basic homeowner information she should have been aware of if she spent 1 hour doing due diligence and understanding in home ownership. Perhaps she should try selling for a price according to the market and not an irrelevant measure like the CV. She should be grateful the CV is dropped and actually advocate for dropping it further since she complains about the rates so much.
Her property is a dinger, esp considering her Big Entitlement Energy, and the section size is really not worth much. "She had requested to meet with the council’s chief executive to raise her concerns" I hope they laugh in her face because education, and subtle attempts support her out of ignorance has obviously flown over her head.
I vote she should be working since she is completely able bodied and able to. However she should never be in charge of finances or admin given her lack of due diligence and financial understanding, but we sure do need more checkout operators, waitresses and liquor store managers.
Remember that vendors are entitle to negotiate the selling commission rate with real estate agents. The commission rate is not fixed by statute/regulation.
Sensible to draw up a short-list of local agents who you think are honourable/trustworthy etc - and then play them off against each other. Make competition work for you...... You could quite easily save a good dollop of money - which might be used for furniture, home appliances etc in your next abode.
Also, if you have the time and wherewithal, you might try selling the property yourself. Just as with vendors, there are buyers who are happy to avoid engaging with real estate agents - and not only because of the potential financial savings. 💰✅
TTP
You could break the mold here TTP. For ex, offer your services for 'free' to a seller in exchange for allowing you to involve fee-paying students to be involved in the whole process.
Think of it like 'The Apprentice'. Win (seller) -Win (TTP) -Win (Students).
Sensible to draw up a short-list of local agents who you think are honourable/trustworthy etc - and then play them off against each other
Too late for hapless Hamilton and Manawatu vendors who were duped by price-fixing RE companies:
Property Brokers Manawatu and director fined $1.5m in price fixing case
how did he pay his fine, did he have to sell his pooperty portfolio
What property portfolio? They were all owned by Ltd companies or trusts no doubt.
Never understood why REAs here get around 3 or 4 % but in UK it's 1.4% (and you pay for advertising here)
https://hoa.org.uk/advice/guides-for-homeowners/i-am-selling/how-much-should-i-pay-the-estate-agent/
https://calculate.co.nz/real-estate-commission-calculator.php
Do they work 3 times harder?
Its because in NZ the industry attracts a higher quality of person............
😆🤣
As far as I can tell, they need compensation for all the time they spend advertising and competing to get those lucrative commissions. The structure of the industry seems awful - much better to have half as many agents charging half as much and selling twice as many.
They will point to the even higher commissions in the US, but these are likely to fall after recent legal rulings:
https://edition.cnn.com/2024/03/15/economy/nar-realtor-commissions-sett…
The real estate industry here is highly inefficient. In Australia, its usual for a real estate agent to only operate in a single suburban area (they are usually required to live in that area as well) and they will have about a dozen listings at any one time which they can walk to between scheduled open homes. Commissions are about 1.5%. Compare NZ where an agent has maybe 3-4 listings which are scattered all over the city, so you are paying for their travel time between open homes (or you get the office junior agent doing them), and commissions are 4%. Auctions are held in the street outside the property, so no need to pay for expensive auction rooms and big offices.
Its also much easier to be a buyer in Australia - you go on the mailing list for the 3-4 local RE offices in the area you are looking to buy, and that's all you have to deal with. No being mailed out of suburb listings by random agents you might never see again.
So you're saying nz REAs get more because they have to drive about more?
Sorry but i call BS on that. In UK, agents in towns will be servicing satellite villages.
Uk also don't tend to do open homes do they have to take multiple groups through for viewings
No, I'm saying they are inefficient, and driving across town multiple times a day is an example of that. Whereas Australian agents dont drive anywhere, so they can fit in 6-8 open homes on a single day. NZ agents dont even have that many listings each.
In London its often an office flunky who shows you the property, they do not answer questions they just facilitate a viewing.....
Tired Ploppy lives on this forum . Obviously nothing better to do . Continually spouting their aged wisdom 😊
Lots of volume on the offer, little volume on the ask, a wide spread, low liquidity.
Things will improve for agents as prices fall and volumes recover.
If prices do not fall, things will not improve for agents.
Boing said Debedee (the talking jack-in-the-box)
Oh dear said Dougal
Its not that people don't want to buy, they do. The issue is they cant qualify for the credit at normal rates and ponzi price expectation. Owners can hold on till they get the extra if they can - that is a personal choice. Meanwhile your return on capital, vapour or otherwise, will be outperformed by mostly everything else out there. Those that cant hold on face the market or finally the banks liquidation process.
Popcorn.
The issue is they cant qualify for the credit at normal rates and ponzi price expectation.
This is the issue wreaking havoc across the Anglosphere.
Correct. Especially with Gen x, y, z. This is a huge problem - asset (house) prices are about to tumble, unless they can make credit ridiculously cheap again without stoking inflation.
DTI will limit credit here
It'll only limit the higher peaks given the high DTI loans are still allowed, but only up to a percentage of total. FOMO cap XD
Ive been tentatively looking, no problem with finance, vendors and agents still in lala land price wise, vendors in the provinces seem more unrealistic than the big cities from my meagre experience
What is the typical commission structure these days for residential? Has it changed at all with rising values of houses?
I've noted a definite shift in tone with articles in OneRoof.
Lots of articles alluding to unrealistic vendor expectations. I think the realisation is finally setting in, that the best chance of restoring volume is to work on vendor expectations, not buyers.
some examples
Sometimes owners who needed to sell their house before they could buy felt they were losing money if they could not achieve the prices that were being gained back in 2021, he said.
That might be the difference of getting $10m in 2021 and only $6.5m in today’s market.
“So you get this log jam where they want to buy in today’s value but they don’t want to sell because it’s like their nest eggs and they can’t get income.
Granny needs to be careful. As they say, don't bite the hand that feeds you.
Meanwhile the hand is starving to death
Vendors need to understand, which is slowly happening, that the only loss is their mood when their expectations aren't met from being unrealistic. Hilarious to think some feel short sold if they only get 2.5x what they paid for a house vs 3x etc etc. I'm sure Joe public would really sympathise for them. Or, perhaps without achieving the 2021 sales price, they can't afford to help their kids towards a house, what a terrible shame, a real pickle. Perhaps they ought to stop hating the players and hate the game.
We are currently making uncond offers on a place in Tauranga hundreds above 2022 CV and several hundred above what they payed for it, not sure what planet they're on.
...maybe specsavers has closed down?
Sheesh that’s a dramatic haircut
The other interesting dynamic here is whether there will be pressure on agent commissions.
High commissions have traditionally come with the tacit promise of a good result for the vendor. Moreover vendors will happily overlook the big comission payout, when they've just made a fortune on resale...
Traditional agents? Vs new kids on the block. Sold house in 2018. Met with a few traditional agents, explored commission rates and my price expeditions. They gave me low ball expectations and high fee structure. I finally tried a new kid on the block (aritzo) and we live in the Rodney district. They charges me a fixed fee of 9k including marketing and managing the open homes. Full interactive website for us to monitor progress also including trade me etc. Sold the house for 300k above CV and 200k above the traditional agents and saved approx. 30k and none of the usual crap that the traditional agents put you through. Wonderful experience BUT it looks like they didn’t manage to grow client base which is rather sad.
Canada going for 'halal mortgages'. This is as woke as anything that Team Dame Jacinda Kate Laurell Ardern GNZM could have come up with.
It's a pity that it seems that it only applies to those of Muslim faith.
The federal budget mentions the creation of halal mortgages as a means to 'enable Muslim Canadians, and other diverse communities, to further participate in the housing market'
https://nationalpost.com/news/canada/trudeau-halal-mortgages
They simply rename "interest" as "rent" and you still pay the full "capital + interest" final price over the term.
With an Islamic halal mortgage, the bank buys the property for you and either charges you rent until you fully own it, or sells it back to you at a higher price.
You will have a plan to pay it back in instalments, but there will be no interest involved. Either way, the bank still makes a profit.
Just like buying a home with a regular mortgage, you will enter a contract with the seller and agree a price. You will need to provide the Islamic mortgage provider with a deposit (typically 5-35% depending on the lender), and they will use that towards the purchase of your property.
The lender owns the remainder of the property (that wasn’t covered by your deposit) and either charges you monthly instalments in the form of rent or sells the property back to you at a higher price, which you repay at a fixed amount each month.
The rental rate on an Islamic mortgage can fluctuate, but HPP products usually have an initial fixed period like many standard mortgages.
Cheers. I have never really understood Muslim faith and usury.
Trudeau is just leveraging the woke emotional appeal anyway. There is no indication these left-of-center celebrities give a rats about what they have helped to create.
I'm not convinced Justin Trudeau is a real human anyway (although he does bear a strikingly resemblance to Fidel Castro). He's just an AI experiment designed to see how effectively you can govern based on nothing more than meaningless platitudes and trying to be as cool as possible despite being totally cringe. Turns out, if current polling over there is anything to go on, that the experiment has failed.
Based off what my Canadian friends tell me and the general consensus on places like Reddit, he's done an even better job than Ardern did at going from the highest levels of popularity to being hated by many in a short space of time (FWIW I'd take Ardern any day of the week over Trudeau, no questions asked. He is a complete weenie of the highest order)
I expect Pollievre to be Canada's PM next year
https://angusreid.org/trudeau-poilievre-best-prime-minister-singh-canad…
I rank the worst Covid tyrants in this order - Justin Trudeau, Dan Andrews, Jacinda Ardern. Fortunately Trudeau is the only one left, and he'll soon be consigned to the annals of history as well. Good riddance to all of them.
It’s not woke, it’s allowing Islamic persons access to financial products which align with their faith. They already exist in terms of sukuk bonds.
Of course it’s all just a big work around but an Islamic scholar will bless it as acceptable and everyone moves on.
UK banks offered them for some time
Shut up Frank. JC has a woke culture war agenda to peddle, we don't want none of this reasonable explanations here thank you very much...
While the rest of the country has happily moved on, he'll still find any opportunity he can to give Ardern the "full name treatment" including honorific title and order of merit. Angry old man vibes.
You know things are bad when one of the largest RE agencies in town remove their auction results page from their website and auction videos from Youtube.
Doesn't sound good. However, Barfoot & Thompson and Duval still involved with the Blues.
Ha! and supposedly auctions are great because of transparency?
I noticed Bayleys on their live auction feed now automatically hides the bid history for anything that passes in.
I don't need a real estate agent help to sell my house.
I assume in 2 years from now all agencies will close
Agreed. The last three houses I have sold I did myself. Be prepared, smile, be polite, listen. Std sale and purchase contract is cheap and some photocopying at work.
House prices have doubled in the last 4 years, their commission rates remained much the same, thus made twice as much than before. No sympathy whatsoever!
Almost the same as 2018. Prices have increased from 50% to 100% since then, yet real estate commissions are the same. Inflation up by 20% also
That in nz we continue to consider the decljne in renumeration of real estate agents of any importance to the larger economy is a worry.
Surely we should be worrying about the fluctuating renumeration of our best export salespeople, or any reduction in investment in tech .... or something useful that supports the long term success of our nation.
When our key economic kpis include not selling more houses to each other for more money or not importing enough low skilled workers to keep house prices high (as our skilled kiwis vacate them).. we should worry.
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