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The Reality of Real Estate Sales in New Zealand: Few Deals, Fierce Competition
In the world of New Zealand real estate, the average agent makes only around four sales a year, according to data from the Real Estate Authority. While this figure might surprise those unfamiliar with the industry, it sheds light on the competitive and often challenging environment that real estate professionals face.
Fewer Agents, More Sales
The number of licensed real estate agents in New Zealand has decreased, dropping 2.5% from 15,893 in September 2023 to 15,497 a year later. Despite this decline, sales volumes have risen by 12.2% over the same period, according to Infometrics chief forecaster Gareth Kiernan.
This shift has resulted in a modest increase in sales per agent, from 3.86 in the previous year to 4.44 in 2024. Consequently, the average commission per agent also rose by 14.6%, climbing from $107,800 to $120,300 annually. However, this increase remains 7% below the average since 2013 and a significant 39% below the peak levels seen in 2020 and 2021.
A Tough Market for Many Agents
The real estate market has seen dramatic changes in recent years, with property sales plummeting from over 100,000 annually to just under 60,000—a 42% decline. Property prices also dropped by 18%, significantly impacting commission-based earnings.
Jen Baird, chief executive of the Real Estate Institute, highlighted the difficulty of the current market, especially for new and less experienced salespeople who are paid only upon making a sale. “In these markets, really established real estate professionals continue to do well, but it can be challenging for others,” she said.
Despite these challenges, Baird noted that the industry has become more of a long-term career choice. She suggested that the current market offers a valuable learning environment for newcomers. “If you learn your craft when things are tough, you’ll excel when things improve,” she added.
Real Estate: A Lucrative but Volatile Career
Economist Shamubeel Eaqub pointed out the precarious nature of real estate work, given the self-employed status of many agents. The market’s significant fluctuations, he said, make stability difficult.
“You don’t get many industries where activity swings as dramatically as in real estate,” Eaqub observed. Despite these swings, the rising value of New Zealand properties has generally pushed commissions higher. For many sellers, the perceived value of a trusted, well-known agent outweighs the cost of commissions, ensuring that traditional commission models remain dominant.
Why So Few Sales Per Agent?
Several factors contribute to the low average number of sales per agent:
- High Agent-to-Sale Ratio: With nearly 15,500 agents competing for a limited number of transactions, competition is fierce.
- Economic Conditions: A soft market means fewer transactions, leaving many agents with few or no sales in a year.
- Industry Turnover: Real estate is a profession where individuals can enter and exit relatively quickly, often leading to a mix of seasoned professionals and newcomers.
The Silver Lining
While fewer sales might seem discouraging, established agents often thrive even in challenging markets. Those who persevere gain valuable experience and develop strategies that allow them to excel during both downturns and booms.
The New Zealand real estate market continues to be a dynamic and rewarding field for those who can navigate its ups and downs. For aspiring agents, learning the ropes in a tough market might just be the key to long-term success.