Auckland continues to be a tough market for the real estate industry with commissions in the first quarter of this year down an estimated 29% compared to the first quarter of 2016.
Interest.co.nz estimates that agencies earned about $119 million in gross commissions from residential property sales in Auckland in the first quarter of this year, down from $167 million in the same period of 2016.
Compared to the first quarter of 2017 commissions were down 13% and compared to the first quarter of last year they were down 12%.
The downturn in estimated commission revenue was almost entirely due to a decline in sales volumes rather than any weakening of prices, with the number of sales reported by the Real Estate Institute of NZ declining from 6692 in the first quarter of 2016 to 4539 (-32%) in the first quarter of this year, while prices have remained remarkably stable over the same period.
Auckland wasn’t the only region where the real estate industry would have found the going tougher this summer, with commissions also well down at the top ends of both the North and South Islands.
Interest.co.nz estimates that that gross commissions in Nelson would have been down 16% in the first quarter of this year compared to the first quarter of last year, while estimated commission in Marlborough was down 9% over the same period.
Other regions where estimated gross residential commission revenue was down compared to last year were Northland -12%, Waikato -2%, Gisborne -14% and Tasman -1%.
Going against the trend, estimated commissions were up compared to the first quarter of last year in the Bay of Plenty +1%, Hawkes Bay +3%, Manawatu/Whanganui +4%, Taranaki +3%, Wellington +5%, West Coast +16%, and Southland +25%, while the numbers were unchanged from a year ago in Canterbury and Otago.
Although prices have been largely flat for more than two years in Auckland, they have remained firm in most other regions, and in regions such as the Bay of Plenty, Hawkes Bay, Manawatu/Whanganui, and Wellington, the total estimated amount of commission earned in the first quarter of this year was up compared to the same quarter of last year, even though sales numbers were down, due to the strength of the price increases.
However a hard fact in a commission-based industry such as real estate is that even though the total amount of commission earned may have been up in seven regions, sales were down compared to a year ago in 14 of the 16 regions around the country, meaning there would be fewer commissions to go around.
That problem would have been particularly severe in Auckland and with no sign of an imminent improvement in sales numbers, many in the industry could be facing a lean winter.
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