New Zealand’s real estate industry is being smashed by the housing crash, with overall commissions plunging 31% compared to the first quarter of last year and 47% compared to the first quarter of 2021, according to Interest.co.nz estimates.
That indicates that during the past two years, the amount of commission revenue going to agents has practically been cut in half.
Agencies in Auckland have been worst hit, with gross residential commissions reported to have totalled $114 million in the first quarter of this year, down 40% from Q1 2022 and down 58% from Q1 2021.
This year’s predicted national first quarter commissions have been the lowest since Interest.co.nz started tracking them in 2016, with the exception of Q2 2020, when real estate activity was significantly restricted by Covid shutdown restrictions.
A significant decrease in the number of properties sold is the primary cause of the loss in commission income.
The latest Real Estate Institute of New Zealand (REINZ) figures shows that total number of properties sold across New Zealand in March 2023 was 5,877, down 15% year-on-year.
REINZ’s House Price Index also reported a 16.8% national decline in home prices from their November 2021 peak.
Reserve Bank figures likewise reported a 36% decline in new mortgage originations in the year to March:
Mortgage rates in New Zealand have more than doubled as a result of the Reserve Bank’s aggressive monetary tightening:
And New Zealand’s economy is heading into recession after contracting 0.6% over the December quarter.
Consumer sentiment around the economy and household finances has collapsed, and homebuyers are most concerned about rising interest rates, obtaining finance, and further price falls:
Therefore, New Zealand’s real estate agents should expect to be living on starvation commissions for the foreseeable future.
After creaming it over the pandemic as New Zealand recorded one of the world’s biggest house price booms, the nation’s real estate agents are now experiencing a generational bust that will likely force many out of the industry.
