Real Estate Agents

PHOTO: Real estate agent. FILE

According to STUFF Real estate agents are likely to see their take home pay fall by a fifth as a result of falling house prices and sale volumes, Infometrics forecasts.

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Infometrics chief forecaster Gareth Kiernan said with inflation running at about 7%, the fall would feel more like a 30% drop.

The drop in commissions was driven by fewer sales occurring in the market, and house prices falls.

“There is a significant slowdown and drop off there that will probably extend out into 2024 as well,” Kiernan said.

Infometrics chief forecaster Gareth Kiernan says many people were drawn to the real estate workforce by a very hot market over 2020 and 2021.
SUPPLIED: Infometrics chief forecaster Gareth Kiernan says many people were drawn to the real estate workforce by a very hot market over 2020 and 2021.

Sale volumes were sitting at over 100,000 a year mid last year, and that had reduced by roughly a quarter to about 75,000, and were forecast to fall further.

“Our expectation is that as we head into 2023 that those sale volumes will drop further below 70,000 per annum,” Kiernan said.

At the same time house prices had fallen about 10% since the peak late last year, so for every sale that did occur there was less commission for the real estate agent, he said.

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Real estate agent numbers had boomed during 2020 and 2021, as more were drawn into the industry by the high incomes that could be achieved.

“The lift was around 12% or 13% in terms of agent numbers during that time,” he said.

In June there were 16,866 active real estate agents in the market, according to the Real Estate Authority, up from 15,520 during the same month two years before.

“Our expectation is that over the next couple of years is that those agent numbers do shrink,” Kiernan said.

During 2017 and 2018, when the market last slowed, agent numbers reduced by about a fifth, but Kiernan said the current downturn was far more significant.

Reinz data used by Infometrics showed the number of house sales in the quarter ending June 30 was down 32% compared to the same period last year, dropping from 22,973 to 15,689​.

The average sale value had fallen just over $90,000 between the quarters ending December 31 and June 30, to settle at just over $1 million​.

The fall in number of sales and house prices had resulted in the total value of sales falling from over $22.5 billion to $15.7b​ between the quarter ending June 30 last year and this year.

Real Estate Institute active chief executive Rowan Dixon said as with any profession, workloads ebbed and flowed.

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“With the current shift in market sentiment, and in conjunction with the quieter winter months, the pace of sales has slowed, seeing sales volumes and median prices ease across the country,” he said.