The most recent REINZ housing statistics revealed a sharp decline in Auckland transaction volumes, which were down circa 30% in the year to August – the lowest level of August sales in six years:
With Auckland’s sales tracking at their lowest level in at least five years in 12-month moving average terms:
Last month, Interest.co.nz reported that an Auckland real estate agent had slashed their commissions by half in a bid to drum-up business.
Now, Interest.co.nz reports that the pain has spread, with New Zealand real estate agencies’ commissions down an estimated 22.5% on a year ago, and down 30.5% in Auckland:
The real estate industry is facing major head winds as a slump in residential property sales volumes causes a massive decline in commission revenues.
Interest.co.nz estimates the industry earned around $318.6 million in gross commission revenue from residential property sales in the third quarter (July to September) of this year.
That’s 22.5% from the $411 million it was estimated to have earned in the same period of last year.
The third quarter’s results were the fifth consecutive quarter in which the industry’s estimated commission revenue has declined, both on a month-by-month basis, and compared to the same period a year earlier.
The decline in revenue is nationwide, with all regions of the country showing declines in estimated revenue in the third quarter compared to the same period of last year. However there were big variations in the amount of annual decline, ranging from just 0.7% in Manawatu/Whanganui to 30.5% in Auckland…
Agencies in Auckland are likely to be finding the market particularly tough. That’s because the steady decline in the numbers of residential sales being made in the region has seen estimated gross commission slump 41% from a peak of $224.8 million the third quarter of 2015, to $133 million in the third quarter of this year…
The decline in industry revenue is almost entirely due to declining sales numbers…
It’s amazing that a real estate agent in a city where the average dwelling price is more than $NZ1 million, and which is experiencing rampant immigration-fueled population growth of around 44,000 people a year, is struggling to make a healthy profit.
Just goes to show that real estate agents are concerned with transaction volumes first and foremost, rather than rising prices.
