Total residential real estate commissions in Auckland down by 58% compared to two years ago
By Greg Ninness
The real estate industry is being hit hard by the current residential property slump, with overall commission levels well down on previous years.
Interest.co.nz estimates that the real estate industry earned about $317 million in revenue from gross residential sales commissions in the first quarter of this year.
That was down by 31% compared to the first quarter of last year and -47% compared to the first quarter of 2021.
That means the amount of commission revenue flowing into the industry has almost halved over the last two years.
Agencies in Auckland have been the hardest hit, with the region generating an estimated $114 million in gross residential commissions in the first quarter of this year, down 40% compared to Q1 2022 and down 58% compared to Q1 2021.
Around the rest of the country excluding Auckland, estimated first quarter commission levels were down by 24% compared to last year and -36% compared to 2021.
This year's estimated national first quarter commissions were the lowest they have been in any quarter since interest.co.nz began calculating them in 2016, apart from Q2 2020 when real estate activity was severely curtailed by Covid lockdown restrictions.
The main driver of the decline in commission revenue has been a big drop in the number of properties being sold.
Although the slide in sales has gathered pace over the last 12 months it has been a feature of the market for several years, with higher prices resulting in fewer transactions.
In previous years the slow loss of industry revenue from declining sales volumes has tended to be at least partially made up for by higher selling prices as property values soared, which resulted in higher average commissions, but that trend has also reversed over the last 12 months, with average commission levels also dropping.
However, the main driver of the industry's revenue woes has been a substantial decline in sales, which appears to be a long term problem that currently shows no sign of turning around.
This story was originally published on Interest.co.nz and has been republished here with permission.