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Strong Growth in Sales Commissions, but Still Below the 2021 Peak
The New Zealand real estate industry saw a significant rebound in residential sales commissions in 2024, marking the end of a two-year slump. Gross commissions from residential property sales totaled $1.77 billion, representing a 16% increase from 2023. While this resurgence is a positive sign for real estate professionals, the market is still well below its 2021 peak, when commissions topped $2.34 billion.
This recovery is largely attributed to an increase in sales volume rather than rising property prices. Interest.co.nz recorded over 70,000 residential sales in 2024, a 14% increase from 2023, but still 19% lower than the record-breaking figures seen in 2021.
Sales Volume Driving Growth, Not Higher Prices
One of the most notable takeaways from this report is that the market’s recovery has been driven by higher transaction volumes rather than soaring house prices. The average commission paid by vendors in 2024 was just over $25,000, a modest 2% rise from 2023 but still 7% lower than in 2021.
This data underscores the fact that the real estate industry’s success is more dependent on the number of transactions than on record-high property values. For real estate agencies, a buoyant market with increased turnover is more beneficial than a sluggish market with fewer but more expensive sales.
New Zealand’s Property Market Conditions: What’s Next?
While the increase in sales volumes is promising, it’s crucial to examine the wider New Zealand property market conditions to determine if this growth is sustainable.
- Interest Rates & Affordability: The Reserve Bank of New Zealand (RBNZ) has kept interest rates high to combat inflation, making mortgages more expensive for buyers. However, with inflation easing, there is speculation that interest rate cuts could be on the horizon, potentially stimulating further demand in the housing market.
- Property Prices Stabilizing: After a period of correction, property prices have leveled off in many regions, with some areas even experiencing modest price increases. Buyers who previously held off due to uncertainty are now entering the market, contributing to the uptick in sales.
- Investor Activity Increasing: With signs of market stability, property investors are slowly returning, particularly as rental demand remains high. However, changes to tax policies and interest deductibility rules continue to impact investor confidence.
- First-Home Buyers Stepping In: Government incentives and stabilizing prices have encouraged more first-home buyers to enter the market. With increasing competition from investors, this could help sustain demand throughout 2025.
Will the Momentum Continue?
The real estate industry is optimistic, but challenges remain. If interest rates decrease in the latter half of 2025, this could further boost sales activity, driving commissions higher. However, if economic conditions tighten or buyer confidence wavers, the industry could see another slowdown.
For now, the 16% jump in commission revenue signals renewed confidence, but whether this growth will continue depends on policy changes, economic stability, and housing affordability.