Real estate licence numbers decline in complex market - high standards of conduct by real estate licensees are critical

Following the highest ever number of real estate licences issued in 2022 by the Real Estate Authority (REA) the number of active real estate licences in New Zealand has started to decline.

The total number of active real estate licences has reduced by 3.6% since March last year in the latest data issued by the Real Estate Authority (REA) today. REA Chief Executive, Belinda Moffat says as at 31 March 2023 there were 16,099 active real estate licence holders, down from a high of 16,692 last year.

There has also been an 8% uplift in licence holders choosing to suspend their licence. A person cannot undertake real estate agency work while their licence is suspended, but it enables them to return to the sector more easily at a later date.

The biggest reduction has been in the salesperson licence category, which has reduced by 4%. In contrast there has been a 6.7% increase in branch managers, which is likely attributable to the availability of a new branch manager qualification. The increase in branch managers is welcomed by REA, due to the important role they play supervising the large number of salespeople.

In the period 2020-2022, REA saw a surge in new licence applications as more people joined the real estate profession during the hot real estate market and when other industries had slowed in response to COVID-19 conditions.

REA reports that new licence applications have reduced by almost 25% in the year to March 2023 compared to the year to March 2022, with application numbers heading back to pre-COVID-19 levels.

A complex market, requiring high skill and ethical conduct

“While the cooling and complex market is likely to have contributed to the recent slight decline in total active licences, people may leave the real estate profession for a number of reasons. They may be entering retirement, taking another career opportunity, or even undertaking long-term travel,” says REA Chief Executive, Ms Moffat.

REA considers that the complex and challenging market conditions create a new set of market dynamics for real estate licensees and consumers. REA recognises the important role that real estate licensees play in helping buyers and sellers undertake transactions in challenging market conditions. The regulatory expectations are designed to ensure that all licensees meet the high standards expected of them.

“This is a tough market with low stock, reducing prices, increasing interest rates and cost of living challenges. This places pressure on both consumers and licensees. Strong skills, good judgement and experience is critical in operating in this context. Clear communication with vendor clients by real estate professionals remains essential. In this market, there can be increased pressure on licensees to meet a vendor’s pre-sale expectations. It is essential that real estate licensees operating in this environment communicate well with their vendor client and fulfil the fiduciary obligations which they owe them. Maintaining up-to-date appraisals to support vendors to make informed decisions is key, and understanding how and when to use a wide range of methods of sale is important. Equally important is treating all people fairly. It remains critical that real estate professionals ensure that disclosure obligations are met, and the highest ethical sales standards are upheld.

“Achieving a quick sale by cutting compliance corners runs a high risk that a complaint may be made to REA. Professional obligations such as disclosure must not be overlooked, and all parties to a transaction must be treated fairly, as required by the Code of Conduct REA oversees,” Ms Moffat says.

Ms Moffat says that an important part of REA’s role is to help real estate licensees meet their obligations and to be trusted, capable and professional.

“We recognise that the current market is challenging. The decision made by some to leave the real estate profession may be an indication of this. The conduct rules we oversee are particularly important when licensees are operating in these conditions. The Code of Conduct, standards, REA website information and CPD training materials are all ways REA helps the sector to meet the high standards expected. We also hold to account those who do not meet the standards which other licensees work hard to maintain. Real estate licensees work tirelessly for their clients and customers, and most work hard to meet the expectations of trust, and professionalism. We want this to apply to all licensees.”

REA also urges vendors and buyers to thoroughly understand the details of the real estate transaction process, and to play an active role in ensuring a fair outcome.

“Buying and selling property can be one of the most significant and complex transactions a consumer may engage in. It can have high emotional and financial risk. REA has developed extensive resources to inform and empower consumers to navigate every aspect of this process with confidence.

“There is a wealth of detailed information and guidance for buyers and sellers on REA’s consumer website Settled.govt.nz(external link). This includes guides to two fundamental transaction contracts – the Agency Agreement and the Sale & Purchase Agreement which are both available in seven languages.”

“Whether you’re a first-time buyer, or an experienced homeowner, you can never learn too much about the ins-and-outs of property transactions – and should always seek legal advice before signing any real estate agreement,” Ms Moffat says.

ENDS

For more information contact Aaron Alexander, REA Communications and Engagement Manager on 027 237 7196 or via media@rea.govt.nz

Note to Editors

REA Total Active Real Estate Licences

Licence numbers by class

Approved licence applications

• REA’s latest licensing data is published on rea.govt.nz/news/licensing-statistics/. (external link)
• March is REA’s busiest month for annual licence renewals. When REA was established in 2009, all existing real estate licences were transitioned to REA and given an annual renewal date of 31 March. As a result, a significant proportion of total licences (approximately a quarter) still come up for renewal each March. This far exceeds any other single month for renewals and represents a cohort of licensees who have been in the industry the longest.

About REA

The Real Estate Authority (REA) is the independent government agency that regulates the conduct of licensed real estate professionals in New Zealand. We license people and companies working in real estate, provide oversight of the code of conduct, oversee the complaints and disciplinary process for poor conduct by licensees, provide education and guidance to licensees to assist them to meet their regulatory obligations, and provide information to consumers about the real estate transaction process. REA is governed by a Board. The Chair is Denese Bates KC. REA Chief Executive is Belinda Moffat.

People who have concerns about the conduct of a real estate professional can contact the Real Estate Authority (REA) – visit rea.govt.nz(external link) or call 0800 367 732. Consumers seeking independent information about buying and selling property can visit REA’s consumer website settled.govt.nz(external link).