Singapore housing agents reap bumper commissions in 2022 even as sales volume slows

May 29, 2023

REAL estate agents in Singapore enjoyed a banner year in 2022, earning bumper commissions on higher-priced housing sales even though deal volume was lower than in previous years.

And at least one major agency saw its agents’ sales commissions for residential property deals surpassing that of past housing market peaks.

Fewer new projects were launched last year, but most experienced strong sales at pricing that set fresh benchmarks for their locations.

Virtually every new project in 2022 sold around 80 per cent of units over the opening weekend, said Alan Cheong, Savills Singapore’s executive director of research and consultancy.

“For direct agents, they get 2.2 per cent to 2.5 per cent in commissions (from new sales), and for unsold stock in the luxury segment, it can go up to 3.5 per cent in commissions or more.” This compares to the 1 to 2 per cent in commissions for resale deals and HDB sales.

The transaction value of new sales totalled S$17.6 billion last year, as indicated by figures crunched by property data analytics company Amicus for The Business Times. At an average commission rate of 2.2 per cent, this works out to a gross commission of S$386.3 million. Amicus compiled data collected by the Council for Estate Agencies, available from 2017.

Amicus tracked around 8,250 new sale deals that were closed last year, putting the average commission for new sales at S$46,840 per deal.

Commissions averaged around S$27,000 per deal in the condo resale market, where there were 14,883 transactions totalling S$26.7 billion in 2022. Agents for HDB properties meanwhile landed about S$8,250 per deal, with the Housing and Development Board sector seeing 26,643 deals last year valued at S$14.7 billion.

And while the landed home segment saw 1,885 sales, average commission rang in at around S$79,300 per deal. Agents active in this segment also made an average of S$41,800 a year. This is primarily due to the much higher price quantum for landed homes, said William Lai, chief executive officer of Amicus.

Statistics from one agency showed that their agents pulled in a median monthly commission of S$5,000 last year, compared to S$3,160 to S$3,420 in the last market peak in 2012 and 2013.

The top 10 per cent of the agency’s earners raked in monthly commissions of around S$21,300 in 2022 – much higher than the S$12,000 a month earned from the 2012-2013 period. Those in the bottom 10 per cent drew S$1,250 a month last year, up from S$1,080 a month in the 2012-2013 period.

When the market dipped in 2016 and 2017, agents made a median monthly commission of S$3,500 to S$4,000, with the top 10 per cent of earners bringing in S$12,750 to S$15,670 a month and the bottom 10 per cent drawing S$1,080 to S$1,170 a month.

Savills’ Cheong noted that before the pandemic, commissions were just 1.5 per cent. Less than 1 per cent of the overall sales would go to the agent, after deducting a cut for the agency, he said.

Private home prices were higher in 2022 too, resulting in higher commissions on units sold, noted Justin Quek, OrangeTee & Tie’s deputy chief executive officer.

Overall, private home prices grew 8.6 per cent last year. PropNex head of research and consultancy Wong Siew Ying noted that this was the sixth yearly increase in prices since 2017. The overall price index for private homes ended 2022 at an all-time high, and 23.1 per cent higher than during the previous market peaks in 2012 and 2013.

Meanwhile, transaction volume fell last year as the market weighed government measures aimed at cooling prices and moderating demand.

Official data released on Jan 27, 2023 indicated that developers sold 7,099 new units in 2022, some 46 per cent less than the 13,027 new units sold in the previous year. Resale transactions totalled 14,026 deals, about 30 per cent lower than the 19,962 sales in 2021.

Agents are now facing increasing competition in the industry, with transaction volumes expected to slow further at the top end of the market and in investment sales as higher additional buyer’s stamp duty (ABSD) bites. Meanwhile, the emergence of zero-commission platforms could erode agents’ earnings in the future.

Agents might have their work cut out for them in the coming year. “Supply is higher now, giving buyers more options to shop around and delay their purchases,” Cheong said.

“The market has also reached a point where new launches across the island generally start at S$2,200 per square foot, and this is starting to push the limits of affordability. People will be less willing to buy a home or they have to muster up more resources to do so.”

https://www.businesstimes.com.sg/pro...s-volume-slows