Residential real estate commissions drop an estimated 31% year-on-year
![Wallet.jpg](https://content.quotablevalue.co.nz/media/images/Wallet.width-800.jpg)
By Greg Ninness
The housing market slump is taking a savage toll on real estate agencies’ revenues, with estimated commission levels down by almost a third compared to a year ago.
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%.
The biggest declines were in Auckland -34%, Marlborough -31%, Waikato -25%, Manawatu/Whanganui -24%, Northland -19%, Wellington -17% and Canterbury -15%.
Only one region went against the trend and posted an increase in commissions. That was Taranaki, where estimated total commissions rose 2%.
The sharp drop in commission levels over winter was mainly driven by a sharp downturn in sales volumes compared to last year and to a lesser degree by falling prices, which pushed down average commission levels.
However as the graph below shows, the big drop in estimated commission levels this year followed a boom in agency revenues, that occurred after the first pandemic lockdown put severe constraints on real estate activity in the second quarter of 2020.
![commissions2.png](https://content.quotablevalue.co.nz/media/images/commissions2.width-800.png)
That strong lift in commission levels lasted from the third quarter of 2020 until the fourth quarter of 2021, but there has been a steady slide since the start of this year.
Although the graph suggests commission levels may only be returning to their longer term norms, it still doesn’t paint a pretty picture because the decline has mainly been driven by lower sales volumes.
And in a commission driven industry, that means fewer agents getting a slice of the pie.
This story was originally published on Interest.co.nz and has been republished here with permission.