The residential real estate industry appears to have weathered the lockdown storm better than expected, with estimated industry commissions in the third quarter down less than 10% compared to the same period of last year.
Interest.co.nz estimates real estate agencies earned $503 million in gross residential sales commissions over the three months from July to September this year.
That's down 9.8% compared to the same three months of last year.
That's a relatively modest decline in sales revenue considering New Zealand was in some form of Covid-19 restrictions for half of August and all of September.
What was even more surprising was that Auckland, where lockdown restrictions have been harshest, appears to have fared better than most of the rest of the country.
Interest.co.nz estimates agencies in Auckland earned about $221 million in sales commissions in the third quarter of this year, down just 5.9% compared to the third quarter of 2020.
In the rest of the country excluding Auckland, an estimated $282 million in residential commissions were earned in the third quarter, down 12.6% compared to the same period of last year.
Gisborne was the only region to go against the trend, with estimated commissions in the third quarter up 19.2% compared to the same time last year.
However sales and commission figures for Gisborne can be volatile from month to month, due to the small size of the market and the comparatively low number of sales in the region.
Interestingly, the two areas where estimated revenues were down the most and the least were next door neighbours at the top of the South Island.
Estimated third quarter commissions were down just 0.9% compared to a year earlier in Marlborough, while over the hill in Nelson they were down by 42.1% (see the table below for the full regional figures).
There were several reasons that the drop in estimated commissions during the third quarter was not as severe as might have been expected.
Firstly, July was a reasonably buoyant month for the time of year which got sales off to a good start for the quarter, with that continuing into the first half of August.
Outside of Auckland, the harsh restrictions of Level 4 only lasted for a couple of weeks, which meant sales started to rebound in most places in September.
Also, the industry was better prepared to cope with a lockdown this year, which allowed sales to continue to be made via remote methods.
Those factors minimized the effects of the lockdowns on sales. And although there was a reduction in sales, selling prices were higher than they were 12 months previously. This pushed commissions up, reducing the overall impact of lower sales on total commission revenue.
Depending on what happens with Covid-19 restrictions around the country, the figures suggest commission revenues could bounce back quite strongly over the summer months.
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