The residential real estate industry had a revenue bonanza in the first quarter of this year, with estimated industry commissions up 48% compared to a year earlier.
Interest.co.nz estimates the real estate industry earned just a tad under $600 million in total gross residential sales commissions in the first three months of 2021, compared to just over $400 million in the same period of last year.
That followed three consecutive years (2017-2019) in which estimated first quarter commission revenue was flat at about $350 million.
Most of the growth this year came from the rampant Auckland housing market, where estimated total sales commissions soared to $275 million in the first quarter of this year, up by 77% compared to the same period of last year.
In the rest of the country excluding Auckland, estimated total commissions were just under $320 million in the first quarter, up 29% compared to a year earlier.
Across the country the biggest increase occurred on the West Coast where the estimated total commission was up 170% in the first quarter of this year compared to the same period of last year.
However, the West Coast market is so small that total commission levels remained under $3 million in the first quarter, even with the substantial increase.
Marlborough was the only region to post a decline in estimated total commission in the first quarter, down 18% compared to a year earlier.
The growth in industry commission revenue was driven by an increase in the number of properties sold and substantially higher prices, which pushed up the amount of commission payable on most sales.
The huge increase in selling prices that has occurred in the last 12 months means that in percentage terms, industry commission revenue has grown at almost twice the rate at which sales have increased.
That meant that estimated total commission levels were up significantly in Gisborne, Hawke's Bay and Manawatu-Whanganui in the first quarter of this year compared to the same period of last year, even though there were declines in the number of properties sold in those regions over the same period.
The spectacular buoyancy of the market since Level 4 lockdown restrictions were lifted a year ago has made the real estate industry one of the big winners from the Reserve Bank's strategy of driving down interest rates, along with the big Australian-owned banks that dominate the residential mortgage market, but it has pushed prices beyond levels that many first home buyers can afford and also contributed towards a growing millstone of mortgage debt which could weigh more heavily on the economy as interest rates rise.
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