Real estate agency commissions return to pre-pandemic levels, could be in for a period of relative stability

By Greg Ninness

Real estate agencies' commission levels from residential sales appear to have stabilised at pre-pandemic levels after a period of significant volatility.

Interest.co.nz estimates agencies throughout New Zealand earned about $401 million in gross residential sales commissions in the September quarter, almost unchanged from the estimated $398 million in the June quarter.

The graph below shows the estimated quarterly commission levels from the third quarter (Q3) 2016 to Q3 2023.

This shows that commissions revenues would have bottomed out at a meagre $266 million in the second quarter of 2020 due to the effect pandemic lockdowns had on real estate sales. Commissions then surged to new heights in the buying frenzy that followed, hitting a peak of almost $700 million in the fourth quarter of 2020 as the Reserve Bank pushed down mortgage interest rates to record lows.

However the housing market cooled almost as rapidly as it had heated up, with commission levels dropping sharply from the beginning of last year and interest rates started rising again.

Over the last six months total commission levels appear to have flattened out at levels that would have been near the top of the range pre-Covid, suggesting the market, and by implication agency revenues, could be in for a period of relative stability, although there will still be the usual seasonal fluctuations.

This story was originally published on Interest.co.nz and has been republished here with permission.