Won't somebody think of the poor real estate agents?

The latest sets of house price results showed that New Zealand house prices and sales have fallen heavily in response to the Reserve Bank of New Zealand’s (RBNZ) aggressive monetary tightening.

For example, the leading REINZ House Price Index has plummeted 12.6% from its November 2021 peak, with sales volumes also down 12.9% year-on-year in September.

The plunge in both house prices and volumes has seen the nation’s real estate agents take a severe haircut, with sales commissions tanking an estimated 31% year-on-year:

Interest.co.nz estimates that agencies throughout the country earned an estimated $348 million in gross residential sales commissions in the third quarter this year, down 31% compared to the same period of 2021.

In New Zealand’s largest housing market, Auckland, total estimated commissions were down 34% year-on-year. In the rest of the country excluding Auckland total estimated commissions fell 28%…

Prospects of a turnaround took a battering this week with New Zealand’s consumer price index (CPI) coming in at a red hot 7.2% in the year to September, which was far higher than any market forecast.

The RBNZ was already on a hawkish footing prior to the result, with the latest monetary policy statement noting that the board considered a 0.75% hike in October, and would move swiftly to snuff out any inflationary pressures:

The Committee considered whether to increase the OCR by 50 or 75 basis points at this meeting…

Committee members agreed that monetary conditions needed to continue to tighten until they are confident there is sufficient restraint on spending to bring inflation back within its 1-3 percent per annum target range. The Committee remains resolute in achieving the Monetary Policy Remit.

Therefore, the latest inflation shocker is likely to be met with further aggressive rate hikes from the RBNZ.

All of which points to further increases in mortgage rates, alongside falling house prices and sales.