Given my role in this industry, I naturally often get asked questions about the state of the market and the activity on the website, this tends to provides a great opportunity to share the kind of information and statistics I detail on this blog with friends and colleagues.
But the other day a friend accosted me by saying “so .. what are the facts in real estate?” – I realised after a momentary hesitation that he was not looking for me to provide the “concise statistics to NZ real estate version 48”, but rather he was enquiring into the latest marketing campaign currently being undertaken here in Auckland by Barfoot & Thompson – they call it “facts in real estate” complete with its own micro-site.
The question got me thinking as to the level of awareness of “key facts” regarding real estate in NZ; so I thought I would share some of these here in a brief format to assist those who may be interested in the industry as a career or just out of curiosity.
2008 will be a very slow year for real estate – an estimated 60,000 residential properties will be sold by real estate agents with a combined sales value of around $20 billion. This compares to 2007 with 92,000 and a sales value of $37 billion. The current median price of property in NZ is $340,000, this is up from $282,000 3 years ago and $185,000 6 years ago.
There are somewhere around 1,300 licensed real estate offices in NZ at this time. The number is declining as a function of reduced sales = reduced income = cut costs. A year ago there were probably around 1,450. The numbers are not published on a regular basis, but we naturally track our subscriber base which generally represents around 90% of all offices in NZ who use our site to feature their listings.
There are 10 what would be called major groups (all of which have over 50 offices) – they are a mix of public companies (PGG Wrightson), private companies (Barfoot & Thompson), marketing groups (Professionals, First National) and franchises (Harcourts, Ray White, Century 21, LJ Hooker, Harveys and Bayleys). Bayleys is a type of hybrid having both franchisees and company owned offices. These 10 groups account for around 60% of all the offices in the country.
The average office in NZ has 10 salespeople, the largest has just under 100 and at last count there were just under 250 offices with less than 5 salespeople.
Based on the current market there are around 13,000 sales people, although this number is declining. With around 110,000 real estate listings at this time this means that an average salesperson handles around 8 listings at any one time. With just 60,000 sales this year, this means that the average salesperson is making only 1 sale every 11 weeks. Back at the market sales peak in 2003 there were 120,000 sales in total and the average salesperson was making a sale every 7 weeks.
Undoubtedly there are some sales people who are more successful than others, with the most successful individuals managing many sales per week. Whilst there are not many in this league, they do demonstrate the fundamental aspect of this business which is all about personal motivation. All the salespeople in this industry are effectively self employed and only earn income when they sell a property, the more you sell, as a function of your skill in providing top quality service, the more you will earn.
The Selling Process
The majority of property sold in NZ is sold through a real estate agent with private sales accounting for around 10% of all sales.
The costs of service provided by licensed real estate agents are predominantly based on a commission on the selling price. The individual commission is set by each office or group and does vary. This commission is for a full service which may not include advertising the property which is a cost incurred irrespective of successful sale or not, and that is why it is often a cost for the property owner when it involves main media.
There are marketing companies who offer services to assist you in marketing your property as you may try and sell your property yourself. These companies operate outside of the law regarding the legal requirements of real estate agents and cannot act in the transaction, facilitation or negotiation of a sale without becoming a licensed agent. They tend to package up a marketing services under a single fee which is charged regardless of successful sale of the property.