Total estimated real estate sales commission fell 9% year-on-year in the September quarter, and is well down from the peaks of a few years ago

The moribund housing market is starting to take a serious chunk out of real estate agencies' commission revenue.

Interest.co.nz estimates real estate agencies earned around $434 million in gross residential sales commissions in the September quarter (Q3), down almost 9% compared to Q3 last year. It's the second quarter in a row that gross commissions have been below the level of the same quarter the previous year, and the gap is widening.

In Q2 this year, total estimated commissions were down 3.3% from Q2 last year.

Of course commissions are well down from the levels achieved during the last property boom, with Q3 commissions estimated to have peaked at $557m in 2020, putting the current quarterly commission level down by $123m (-22%) compared to its peak. So the latest figures are a long way off the level of those glory days.

Any business facing a decline in revenue will find the going tough, but that is especially so for real estate agencies and their salespeople at the moment because they will also be facing the same inflationary pressures in their running costs that are affecting most businesses.

Estimated Q3 commissions were down compared to a year ago in almost all regions, with the biggest percentage decline occurring in Otago at -16%, followed by Wellington -14%, Waikato -14%, Marlborough -13%,  Hawke's Bay -13%, Northland -11%, West Coast -11%, Auckland -9%, Gisborne -9%, Canterbury -7%, Nelson -6%, Bay of Plenty -3% and Tasman -2%.

The only regions where estimated Q3 commissions increased year-on-year were Manawatu/Whanganui up 7% and Southland up 2%, while commissions were unchanged in Taranaki.