Realtors feel walls crash in
New Zealand’s cooling real estate market could drive one in every five real estate agents out of the industry by this time next year, global realtor Century 21 warns.
NZ director and owner Tim Kearins said the industry could expect to lose between 20 per cent and 30 per cent of its realtors as sale numbers shrink and the market becomes more attractive for buyers.
That translates to between 3200 and 4800 real estate agents of almost 16,000 agents now classed as “active” by licensing agency, the Real Estate Authority (REA).
That’s the most real estate licences ever held in NZ, prompted by a redhot market over the past two years which increased overall licences from 17,896 in June 2020 to 19,236 by June 2022 — across almost 1000 licensed companies.
Real Estate Institute data, meanwhile, shows total housing transactions fell to 74,453 for the 12 months to June, down 26 per cent from the 101,106 for the comparable period.
While Realestate.co.nz numbers show stock for sale at 26,271, almost twice what it was at the same time last year, sale numbers continue to dwell at basement levels — with the 4721 sales in June down 38 per cent on the 7629 houses that traded hands in June 2021.
Kelvin Davidson, chief property economist with property analytics firm Corelogic, doesn’t expect the downturn to end anytime soon. Davidson expects an average value fall of about 15 per cent by mid-2023.
Century 21’s Kearins thinks the biggest casualties in the real estate sector will be newcomers to the industry, who have yet to do the “hard yards” through the recent sellerfocused market.
He said selling in the past three years had been about “sticking a sign on the fence and waiting for buyers to turn up”.
“That’s not real estate. It’s about finding the buyers, helping them get finance, and using networks and other listings to secure those deals.”
Kearins expects the “old-fashioned days when you’d put a buyer in the car and drive them around” to return.
“A lot of what’s happening in the current market highlights the particular skillsets of the agents themselves. Some might stay around but there are clearly people who aren’t making money now.”
Jen Baird, chief executive of the Real Estate Institute of NZ, said while there hadn’t been much attrition to date, she expected more industry casualties as members either exited the scene or put their trading licences on hold.
The institute has 17,000 members, including about 1500 property management professionals. The latter sector was doing well compared to commission-based salespeople, but Baird said it was unusual for a commission-based realtor to shift to rental management.
Baird said while there had been cyclical ebbs and flows, including through the global financial crisis, the difference now was the pace of change on tighter credit rules, loanto-value ratio restrictions, interest rate hikes and affordability issues.
These factors, she said, had created a “perfect storm”. Those who remained were having to “work really hard” to generate returns.
Baird said the focus was now on how to support agents through additional training and tapping into industry information, particularly giving new entrants support.