The real estate industry took a decent hit to the wallet in June as a savage decline in residential sales took its toll on commissions.
Interest.co.nz estimates the industry earned around $109 million in gross residential sales commissions in June. That's down 23% on June last year, and the lowest for the month of June since interest.co.nz began compiling commission estimates in 2016.
However commission levels for the second quarter remained relatively flat, supported by reasonably strong commission levels in April and May.
That meant the estimated national commission level for the second quarter (Q2) was $421 million, up 6% compared to Q2 2023. (See graph below).
Had it not been for the slump in commissions in June, the industry would probably have been looking at its best quarterly commission level since the end of the market boom in late 2021.
The worry for the industry now is the slump that hit the market last month continues into Q3, because while most businesses can cope with a bad month, a bad quarter is more difficult to sustain.
If June's sales levels continue through July and August then the industry could be looking at disastrous commission levels in Q3 this year.
Smaller real estate agencies could be particularly badly hit because when the market is difficult, vendors tend to take a flight to safety, which means they are more likely to list their properties with the bigger and better known agencies, in the belief (rightly or wrongly) this gives them the best chance of achieving an acceptable sale.
Ironically there is often a profusion of so-called "sell your own home" schemes that appear when times are tough, as vendors look to save money on commissions to help offset lower selling prices.
Ironic because selling your own home is a lot more difficult in a tough market than a booming one, and that's when a good agent can be the most useful to a vendor.
Looking ahead, initial indications are that July will also end up being pretty tough.
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27 Comments
Its a real thing. Certainly harder to get sales over the line atm, thus less commission. At a time were inflation has doubled the cost of most things to boot. Sellers still have greed blinkers and buyer's threshold is set by borrowing and servicing costs, aka a lower number. Normally at this phase of market reality lots of agents get other jobs, as they capitulate to reality (lack of advo on toast) or get fired for signing no listings.
Agents need to get sellers to meet the market, or starve.
"this site gets more comments on anything property related than anything else"
Especially if the word "crash" is in the headline, then there are 200+ comments. If a property article states that all is fine, you will get less than 100 posts. It shows where the bias is !
There is a relationship between the property and car sales markets. When the Ponzi is running on all cylinders, it's good for car sales - particularly luxury - and vice versa.
The following link shows how tight the relationship is. And it makes complete sense to me. The purchase behavior of the sheeple is driven by the wealth effect. Similarly, sales of craft beer and artisan foods will struggle if the Ponzi stalls in any meaningful way.
And before anyone says "the graph shows Australia. It's diffrunt here", perhaps you're right, but foolish to dismiss behavioral patterns across the Anglosphere.
https://www.savings.com.au/news/luxury-car-sales-in-australia-rev-up
There's no rush to convince them otherwise. If they realised the digits that magically appeared to finance them into a lifetime of privatised tax payments, there might be murmerings in the huddled masses. Even more murmerings if they realised the amount of magical digits shovelled out by banks was driving the amount of servitude they ultimately strangle themselves with.
Money creation was handed to the private sector because politicians couldn't be trusted. Banks on the other hand, are examples of all the best qualities humanity has to offer. Do I need to add /sarc?
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