PHOTO: FILE
The real estate industry in New Zealand is facing a significant shift, with the number of licensed real estate agents dropping from 16,556 two years ago to 15,557 today. This represents a decline of approximately 6%, highlighting the growing challenges within the sector.
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Why Are Agent Numbers Falling?
The decline in real estate agent numbers can be attributed to several key factors, all tied to the current economic climate:
- Commission-Only Model in a Struggling Economy Real estate agents in New Zealand typically operate on a commission-only basis, earning a percentage of the sale price of properties they sell. While this model can be lucrative in a booming market, it becomes far less attractive during economic downturns. With fewer property sales and declining house prices, agents are finding it increasingly difficult to secure consistent income.
- Fewer Real Estate Transactions The New Zealand property market has seen a slowdown in sales volumes, driven by rising interest rates, tighter lending restrictions, and a cautious buyer market. This reduction in transactions directly impacts agents’ earnings, making the profession less sustainable for many.
- Cost of Living Crisis The ongoing cost of living crisis in New Zealand has added another layer of pressure. With inflation driving up everyday expenses, many agents are finding it challenging to cover their operational costs, such as marketing and transportation, especially when sales are scarce.
- Increased Competition In a shrinking market, competition among agents has intensified. This has led to reduced commission rates in some cases, further squeezing agents’ earnings and making the profession less appealing.
The Broader Impact
The decline in agent numbers is not just a challenge for the individuals leaving the profession but also for the real estate industry as a whole. Fewer agents mean reduced capacity to handle property transactions, which could slow down the market further. Additionally, the loss of experienced professionals could impact the quality of service provided to buyers and sellers.
Looking Ahead
As the New Zealand economy continues to navigate these challenges, the real estate industry may need to adapt. Diversifying income streams, offering more flexible commission structures, and providing additional support for agents could help stabilize the profession. For now, the decline in agent numbers serves as a stark reminder of the pressures facing the sector.
REA licensing statistics (03 March 2025)
