The real estate industry took a decent hit to the wallet in June as a savage decline in residential sales took its toll on commissions.
Interest.co.nz estimates the industry earned around $109 million in gross residential sales commissions in June. That's down 23% on June last year, and the lowest for the month of June since interest.co.nz began compiling commission estimates in 2016.
However commission levels for the second quarter remained relatively flat, supported by reasonably strong commission levels in April and May.
That meant the estimated national commission level for the second quarter (Q2) was $421 million, up 6% compared to Q2 2023. (See graph below).
Had it not been for the slump in commissions in June, the industry would probably have been looking at its best quarterly commission level since the end of the market boom in late 2021.
The worry for the industry now is the slump that hit the market last month continues into Q3, because while most businesses can cope with a bad month, a bad quarter is more difficult to sustain.
If June's sales levels continue through July and August then the industry could be looking at disastrous commission levels in Q3 this year.
Smaller real estate agencies could be particularly badly hit because when the market is difficult, vendors tend to take a flight to safety, which means they are more likely to list their properties with the bigger and better known agencies, in the belief (rightly or wrongly) this gives them the best chance of achieving an acceptable sale.
Ironically there is often a profusion of so-called "sell your own home" schemes that appear when times are tough, as vendors look to save money on commissions to help offset lower selling prices.
Ironic because selling your own home is a lot more difficult in a tough market than a booming one, and that's when a good agent can be the most useful to a vendor.
Looking ahead, initial indications are that July will also end up being pretty tough.
The comment stream on this story is now closed.
•You can have articles like this delivered directly to your inbox via our free Property Newsletter. We send it out 3-5 times a week with all of our property-related news, including auction results, interest rate movements and market commentary and analysis. To start receiving them, register here (it's free) and when approved you can select any of our free email newsletters.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.