The fortunes of the real estate industry are slowly improving, with the estimated amount it earned from residential sales commissions in the third quarter of this year up 7% compared to the same quarter of last year.
Interest.co.nz estimates the industry earned $375.6 million in gross commissions from the sale of residential properties in the September quarter of this year, with estimated commission revenue up in 14 of the 16 regions compared to a year earlier.
The biggest increase was in Tasman at the top of the South Island where estimated commissions were up 20.1% on a year earlier, followed by Otago +15.2%, Bay of Plenty +13.4% and Nelson +13%.
Estimated commissions were also up in Auckland +6%, Wellington +7.3% and Canterbury +9.9%.
The only regions where estimated commission revenues declined were West Coast -1.5% and Southland -3.6%.
Outside of Auckland the increase in commissions was mainly driven by the increase in selling prices between Q3 2018 and Q3 2019, while in Auckland prices remained largely flat and the number of sales was up 7.2% (see table below for estimates of commissions in all regions).
However, the estimated amount of commission earned is still well down from where it was in the third quarter of 2016 when Chinese money was still flooding in to the residential property market, driving frenetic buying activity.
That produced estimated commissions of $413.6 million in Q3 2016, but the flood of money from China abruptly turned to a trickle in the fourth quarter of 2016 as the Chinese Government severely curbed the flow of speculative capital out of the country and by Q3 2017, estimated commissions had dropped to $328.9 million, down 20% from a year earlier
The decline was even steeper in Auckland where most of the Chinese money had been parked, with estimated commissions in the Auckland region dropping from $191.3 million in Q3 2016 to $133 million in Q3 2017, down $58.3 million (-30.5%).
However since 2017 sales in Auckland have been slowly but steadily rising, pushing up estimated commission levels to $135.9 million in Q3 2018 and $144 million in Q3 this year, although they remain down by a quarter from they were in 2016.
As well as having the Chinese money tap turned to low, the market has also been affected by changes to rules on mortgage lending to investors and the tax treatment of investment properties.
All of these factors combined appear have led to a more orderly market where first home buyers are starting to play a more prominent role.
The difference between the markets in Auckland and the rest of the country also shows up in the number of real estate salespeople active in the market.
According to the industry's regulator the Real Estate Authority, the number of active salespeople and offices in Auckland declined from 7042 in September 2016 to 6480 in September this year (-8%), while in the rest of the country the number of salespeople and offices increased from 8280 to 8657 (+4.5%), which meant that overall numbers across the whole country declined by just 1.2% over the three year period.
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|Estimated Real Estate Agencies' Gross Residential Sales Commissions - Q3 2019|
|Region||Estimated Commission Q3 2019||Change from Q3 2018|
|Bay of Plenty||$27,639,399||+13.4%|