A History Paper On Housing and The Real Estate Industry in New Zealand.

Houses and the Real Estate Industry post 1950:
Selling the ‘New Zealand Dream’.
A research exercise presented in partial fulfilment of the requirement for the

Bachelor of Arts with Honours in History at Massey University.
Helena McKeever
2002
CONTENTS
1 Introduction. p.1
2 Part One: New Zealand Housing Stock and Policy (1950-2002). p.4
3 Part Two: Land Agents and the Real Estate Industry. p.17
4 Conclusion. p.33
5 Bibliography p.37
Introduction
It has been said that one does not ‘persistently and extensively study one’s choice of
history topic merely out of idle or antiquarian curiosity, or for the sake of the knowledge
itself’.1 On the contrary, a writer’s decision to interpret and define their choice of ‘other’
may be simplified as an act of intellectual appropriation and colonisation, through which
the writer may find a means of locating and defining and understanding self, ‘both within
the span of human progress and amid strange new cultures and places’. 2 This exercise can
be seen to concur with the above assessment in so far as it has been critically shaped by
the writer’s current wish to better understand, define, and potentially to appropriate
knowledge about, the commercial environment that is the world of housing and real estate.
It has been both an exercise in self-discovery and an opportunity for growth and learning,
and the processes involved in communicating these findings have proved useful to this
writer as a means of ‘locating’ herself as a New Zealand historian, as well as allowing the
writer to become more conscious of, and to facilitate a better understanding of, our
immediate past.
The idea for this project initially began with an interest in knowing more about retailing
history in New Zealand. This idea was then narrowed to a study of ‘house selling’ during
the period 1950 to 2000, and originally was to focus on Hawke’s Bay. This idea has
altered to encompass a non-regional approach, and has been further developed to better
reflect available source material from real estate agents and the Real Estate Institute of
New Zealand (REINZ).
Part One of this exercise examines changes in New Zealand’s housing policy and housing
stock, with particular emphasis on those aspects of housing change that might impact on
house selling. Part Two proceeds to look at changes within the real estate industry, in
particular the changing scales of commission charged by land agents, and changing sales
methods.
1
Howe, K.R, Nature, Culture, and History: The “Knowing” of Oceania, University of Hawaii
Press: Honolulu, 2000, p.62.
2
Ibid.
A particularly useful history that has provided important grounding for this study has been
Gael Ferguson’s Building the New Zealand Dream, a survey of housing policy published
in 1994. The title choice of this exercise, ‘Selling the New Zealand Dream’, builds upon
this perspective, but with the more literal concern of the house as a site of commercial
exchange. At Home in New Zealand: houses, history, people, edited by Barbara Brookes,
was also a useful anthology, and although little direct mention of house selling was made
in this collection, it has provided a valuable context within which to begin a discourse on
housing history.
Discovering how best to gain sources about ‘house selling’ proved the initial challenge for
this exercise, the second being my quest to enable my sources to ‘talk’; and to find the
people in my story. Initially, I wrote to 30 real estate offices in four Hawke’s Bay
residential areas; Napier, Hastings, Taradale and Havelock North (my immediate locale)
with a request for company records or memorabilia pertaining to house selling dating back
a significant period. This was to provide myself with the experience of finding and
utilising a significant body of primary sources pertaining to my specified time frame of
interest, the period from 1950 to 2000, in addition to gaining contacts within the industry.
Only two of the firms approached had a history dating back to 1950, however, with the
majority of the offices coming into existence within the past fifteen years3. This in itself
was interesting, as many of the more current firms carried with them their own fascinating
stories of birth and expansion, and their recent arrival to Hawke’s Bay reflected in part the
more open, competitive nature of New Zealand’s economy and the expanding corporate
nature of the real estate industry during the 1990s. Australian franchises L.J Hooker and
Ray White are two prominent recent arrivals.4
3
Real Estate company, Property Brokers, was founded in 1986 and has 13 Offices in New
Zealand with 3 in the Hastings, Napier, Havelock areas. Bayleys has had one office in Napier
since 1994, has 30 offices nationwide and a 27 year old history, Wrightson Real Estate has 43
Offices in New Zealand in 2002. It is an offshoot of Rural services Company Wrightson Ltd
with 160 year history. Harcourts has 140 offices in New Zealand in 2002 (four of which are in
Hawke’s Bay) and a further 50 in Australia. It was established in 1888. Ray White Real Estate
was founded in 1902 in Queensland Australia. In 2002 the company has 560 offices in Australia
and New Zealand.
4
Firm L.J Hooker was founded Sydney 1928, moved to New Zealand in 1996 and took over the
Challenge Realty group in 1998. In 2002 its website records 600 franchises in NZ, Australia, Papua New
Guinea and Hong Kong. It has two offices in Napier and Hastings. Ray White has 560 offices in Australia
and New Zealand. The company was founded in 1902 in Queensland, Australia, and has three offices in
Hawke’s Bay in 2002.
Throughout this process I was fortunate to gain the cooperation of principals Jim Harvey
and Terry Coxon, of HarveyCoxon Ltd Hastings (trading as Harveys), who responded to
my request for sources, and generously provided examples of records kept to document
house sales from the 1970s, as well an assortment of past company advertising and
memorabilia. Both men have considerable collective real estate experience, and have
proved particularly helpful in pointing to some of the changes and trends that they had
noticed with respect to house selling. However the limitations of this source material have
proved considerable. Finding another primary source in the form of the Real Estate
Journal, first published by the Real Estate Institute of New Zealand in 1938, was therefore
critical.
In some respects, real estate agents and historians are really rather alike. Just as a real
estate agent’s career is characterised by organization, persistence and networking, so too
does the writing of history require a tremendous amount of personal effort. It is a process
requiring careful research and selection of sources, absorption of language and style, an
understanding of historical sequence and personal perspective, and a critical appreciation
of the positive edge necessary to pull together the reading and note taking to reach the
fruition of thought and expression in a completed piece of work – to make the sale that
counts if you like.
I would like to particularly thank my supervisor, Peter Lineham, for his help and patience
toward the end of this exercise, and for his infective enthusiasm for things historical; Jim
Harvey and Terry Coxon for allowing access to sources and sharing their considerable
experience; The Real Estate Institute of New Zealand; Consumers Institute, and also the
Massey University History Department and Massey University Library distance service,
from whom I have derived considerable benefit over a period of years. Finally, a big
thankyou to my family and friends who have provided the base and encouragement that
has allowed this exercise to come to fruition.
New Zealand’s housing stock and policy post 1950
This study is concerned with the history of house selling and explores this topic from the
perspective of sources available on or from real estate agents. However, chapter one
serves to illustrate how land agents, although they are at the literal house selling interface,
by no means sell the New Zealand dream of house and home in isolation, as so many
factors and industries intertwine in this process. Instead it surveys changes in housing
stock in the second half of the twentieth century and provides a brief synopsis of changing
housing policy as an introduction to housing retail. Changes to housing policy and housing
stock reflect many interesting general trends, be they historical, political, economic, social
or even climatic. These trends, in turn, affect housing stock and the environment within
with house sales take place, and, in some respects, foreshadow developments during the
past half-century in the residential real estate industry and retailing scene.
…………………………………
The ‘house’, can be simply defined as a ‘building for human habitation’ 5. An essential part
of any human society, the house is a significant part of our material and geographic
environment - both in a macroscopic, town planning sense, and in the sense of being the
domestic environment within which we interact daily. Houses provide shelter and security,
a physical anchor connecting persons to place, as well as a measure of social status and
lifestyle choices for some.6 Historian David Thomson argues that in New Zealand
particularly, ‘owning one’s home…has come to mean much more than secure shelter or a
good profit’, and is now rather ‘a major rite of passage’ that allows one to buy ‘access to
adulthood and the national way of life’.7 Others have developed this idea of the symbolic
role of the house, seeing the house as a centre for ‘grasping the world, investing it with
care and attention’, as ‘carrying evidence of choice’, and ultimately for providing the
space to ‘store the trappings of our inner selves’.8 Certainly, migrating buyers and sellers
make life-impacting decisions based on an awareness of housing quality and availability -
with access to work, education or recreational resources often influencing choice of and
access to housing. In a market-based, property owning economy, housing has also been
the main area of investment for many; providing capital gain, particularly during periods
5
The Concise Oxford Dictionary Ninth Edition, 1995, p.659.
6
The New Zealand Yearbook 2000, p.463.
7
David Thompson, Selfish Generations, 1991, pp.137-38.
8
Robertson, G., ‘Introduction’, New Zealand Real Estate: 150 Years of Housing, 41:8, Sept 1990. p.5.
of high inflation, and rental income for home owners from an approximate one third of
housing stock.
The term the ‘New Zealand Dream’ refers more to an aspiration of the ‘good life’ that
finds its base in the acquisition of a suitable place of residence within which to live and
grow, and from which to take advantage of available opportunity. Historian Gael Ferguson
has used this as the title phrase in Building the New Zealand Dream, a history of New
Zealand’s housing policies, post 1840, published in 1994. In this she closely links the
‘dream’ of access to desired housing to the rapid growth of ‘garden suburbs’ surrounding
city centres from the 1950s, and to the priority given the dominant three-bedroom
detached family house designed to match the needs and wants of a majority of persons
9
living in traditional nuclear family units at this time. Past ideals about the positive
benefits of rural lifestyle as safe haven and refuge from a pollution prone and morally
deficit city centre played a part in the appeal of suburban living – a lifestyle which
potentially combined the benefits of living close to the land with commuting proximity to
employment and other cultural amenities in New Zealand’s larger city centres, as the
population grew.
The emphasis given to the desirability of different forms of tenure in achieving the dream
of home differed for the two main political parties in New Zealand until the late 1950s,
with National elevating the status of home ownership for the ‘true New Zealander’ and
Labour exploring alternative mainstream public housing.10 However the two parties tended
to converge in their emphasis of the desirability of home ownership in later decades
despite continuing to joust for their respective rights to represent that dream. For example,
as recently as October 2002, Opposition leader Bill English when challenging the Labour
government’s handling of revelations of widespread damage to newly constructed homes
through leakage, used ‘the dream’ terminology as he championed, ‘Home ownership is the
heart of the New Zealand dream!’ 11
The title premise of this thesis – the ‘selling of the New Zealand dream’ - builds on Gael
Ferguson’s, Building the New Zealand Dream vocabulary, though with the more literal
concern for the house as product of sale. The term ‘selling of dreams’ also has the
9
Ferguson, Gael, Building the New Zealand Dream, p.296.
10
11
National Radio News Broadcast, 7 Oct 2002.
connotation of propagation of ideas, the signalling of directions – arguably an essential
part of a growth or building process – and intended less polemically than any association
of sales or consumerism to loss of philosophical direction or value. The house as focus of
dreams and aspirations is vitally important in vocabulary of the house sales process as
well as in general discourse relating humans to housing. Television programmes
pertaining to home renovation and lifestyle and garden magazines frequently use this
terminology, for example.
A comparison of certain key statistics pertaining to housing between 1950 and the present
provides some useful insights into the degree of change occurring during our period.
At the census of 1951 New Zealand had a population of 1,070,84812. This compares with a
usual resident count of 3,737, 277 in 2001.13 Growth over the second half of the twentieth
century thus averages at just over 53,000 people per annum or 1.99 per cent – although
significant fluctuations in this growth rate due to swings in the level and direction of
external migration and a decline in the rate of replacement fertility are apparent. 14 In 1951
there were 494,012 inhabited private dwellings and 32,669 uninhabited dwellings, 15
compared with a total of 1,407,828 dwellings at the 1996 census of which 91 per cent
were occupied.16 This increase of almost one million newly built dwellings meant that
there was twice the amount of construction undertaken as there was in the first half of the
twentieth century.
17
The average number of persons per dwelling declined from 3.61 in 1951 to 2.7 in
2001.18 This is indicative of an increase in housing volume relative to population as well
as in absolute terms, which may be partly attributed to an increase in the number of
couples or singles without or with fewer children, a climbing divorce rate 19 and to an
increasing number of older one-person households as the general population aged.
Housing policy providing substantial capital assistance for new housing in the 1950s and
1960s also played a part. Between 1951 and 1956, for example, the number of inhabited
12
New Zealand Official Yearbook 1960, p.47.
13
www.stats.govt.nz, Reference Reports 2001 Census: National Summary 2001 Highlights.
14
15
New Zealand Official Year-book 1960, ‘Nature of Dwelling Table’, p.651.
16
New Zealand Official Yearbook, 1998, Table 6.2, p.105.
17
New Zealand Official Year-book, 1960, ‘Occupants of Dwellings’ Table, p.653.
18
www.stats.govt.nz, Reference Reports 2001 Census: National Summary 2001 Highlights.
19
New Zealand Official Yearbook, 1998, p.117.
permanent dwellings increased by 69,040 or 14% while the population increased by 12.1
per cent.20 Specifically subsidised loans introduced in 1953 are likely to account for this.
The Family Benefits (Home Ownership) Act that allowed payment in a lump sum of the
Social Security Family Benefit for use as a deposit on a first home also had an impact
from its introduction in 1959.
House sections have tended to decline in size during the period, averaging at 600-700
square meters in 1990 – considerably less than the traditional ‘quarter acre pavlova
paradise’ or 1012 square meter section of popular kiwi icon.21 Infill housing and high-
density apartment style dwellings designed to curb urban growth in inner city centres from
the late 1950s contributed to this decline 22. From 1957, twenty-five and later fifty per cent
of new state houses built were to be multi-unit, for example,23 and ‘company ownership of
flats’ to encourage high-density building was introduced at this time, whereby an
individual bought a block of shares that entitled them to permanent occupation of one flat
in a block of flats.24 By 2001, 18 per cent of dwellings were ‘multiple dwellings’.25
Overall, dwellings have not become smaller, however, with the majority of homes
remaining three bed-roomed, freestanding and single storeyed. In 1951, 36.7 per cent of
homes had five rooms, (The five roomed house was ‘in general the normal three bedroom
house’26) compared to 1996 figures in which three bed-roomed dwellings making up 48.1
per cent of occupied dwellings. The average floor area of new houses also increased from
approximately 110 square meters to 170 square meters between 1974 and 1997.27
At the census of 1951, a majority of New Zealanders, 61.5 per cent, owned their own
residence; half of these with some type of mortgage and the other half freehold.28 The
percentage of rental housing stock varied across regions, with a lower contribution of
rental housing outside the main centres, but a total of 30.3 per cent of the population
rented or leased their residence.29 This was a marked increase from 1945 figures when
20
New Zealand Official Year-book, 1960, p.651.
21
Duff, G.J, ‘The Development of House Styles in New Zealand 1840-1990’, New Zealand Real Estate
Institute, 41:8, Sept 1990, p.19.
22
23
24
New Zealand Official Yearbook 1960, pp. 648-49.
25
www.stats.govt.nz Reference Reports 2001 Census: National Summary 2001 Highlights, 8/10/02.
26
New Zealand Official Year-book, 1960, p.653. House sizes were measured by the number of rooms
in the 1951 census rather than by the number of bedrooms measured in the 1996 census.
27
28
New Zealand Official Yearbook, 1960, ‘Tenure of Dwelling’ Table, p.652.
29
ibid.
43.6 per cent of people owned their homes outright or subject to table mortgage. In 1936,
even fewer, 34.8 per cent, owned with or without a mortgage and 38.8% rented. Rental
figures fell to 35.4% in 1945 when ‘the rented class…lost its dominant position’ as most
predominant tenure according to the yearbook commentary in the early 1950s.30 Home
ownership uptake was most marked in the 1950s31 and by the two 1970s censuses
homeownership in New Zealand had climbed to 72 percent.32 This peaked in 1991 when
73.6 per cent of private dwellings were owned freehold or with mortgages – but it dropped
to 66.2 per cent in 1996.33
New suburbs sprang up all over New Zealand to accommodate the increase in population
following the post war return of service men and the subsequent increase in household
formation in the mid twentieth century. In Auckland city, surveyors’ pegs went in at
Hillsborough, Avondale and Tamaki. Great parts of the farms of the North Shore were
sold, divided and built upon, with connection to our fastest growing city provided by the
new Auckland Harbour Bridge in 1959. In Wellington, new growth occurred in the
suburbs of Tawa and Porirua. In Christchurch, Bishopdale and Arranui emerged.34
Hastings founded the satellite suburb of Flaxmere in the early 1970s, and many other
smaller cities had the same growth. Here, concern at the ‘perennial problem of finding
new suburban land without loosing too much of the valuable horticultural district’ was
voiced and debated, as it was in many districts throughout the country where rapid
expansion fed fears of suburban sprawl.35
A key factor in the growth of suburban areas around larger New Zealand cities was the
ability of people to commute to employment in city centres. New mechanical transport
systems combined with growth in ‘white collar’ urban employment (professional,
technical, administrative, managerial, clerical and sales) and a decline in rural and manual
employment were thus critical factors. White-collar urban employment rose from 25 per
cent of males in the 1950s workforce to 36 per cent in 1996. 36 Auckland’s metropolitan
30
New Zealand Official Year-book, 1951-52, p.528.
31
32
Davey, Judith, New Zealanders and Home Ownership: A Study to examine the current situation as
regards house purchase in New Zealand…for National Housing Commission, 1980 p.5.
33
New Zealand Official Yearbook 1998, table 6.5, p.106.
34
Lineham, Peter, ‘Growing up in North Shore Auckland in the 1950s’ audio cassette, NZ History
Alive: Stories of NZ Children for NZ Children’, 2001.
35
Wright, Mathew, Town and Country: The History of Hastings and District, 2001, p.611.
36
Massey University Department of History, ‘Modern New Zealand Politics,
Study Guide Four’, 1998, p.8.
population grew dramatically from 329,123 in 195137 to reach one million residents by the
end of the twentieth century. The rate of growth was rapid during the 1950s but markedly
slower in the 1960s and 1970s. This growth rate increased again in the 1980s before
climbed most steeply in the 1990s.38
Increased transport mobility was accompanied by a trend towards a generally more diverse
and mobile lifestyle for New Zealanders in the later decades of the twentieth century.39 In
1980, just over ten percent of individuals changed residence each year.40 However,
roughly half of the total New Zealand population changed location between the 1991 and
1996 censuses.41 The expected length of stay in a dwelling and the transactional costs of
selling are important to the ownership decision. Thus such mobility may have contributed
to lowering rates of home ownership in the later 1990s, particularly among younger New
Zealanders who have higher rates of mobility.42
Housing policy has changed considerably in the second half of the twentieth century as
our building industry has become less regulated and the government has withdrawn from
its role in the state housing market and as a key provider of credit. In the past, providing
cheap loans stimulated housing construction, whereas the withdrawal of housing finance
served to dampen demand and avoid inflationary pressures.43
Tight links between government and the building industry had been built up in the early
part of our period with, for example, the Group Building Scheme introduced in 1953. This
scheme enabled builders to build groups of six or more houses for sale with a government
undertaking to take over at approved prices specified numbers of unsold houses. 44 The
Scheme lasted until the late 1960s and built a total of 20,000 homes. By guaranteeing the
purchase of houses, it gave the experience of developing subdivisions to builders and is
credited with aiding the entry of New Zealand building firms into speculative housing.
37
38
New Zealand Official Year-book, 1998, ‘Growth of Cities’ graph, p.89.
39
40
Dixon, G, Housing Stock Turnover, Mobility and Household Change: A Study of the owner occupied
sector of the housing market in Palmerston North in 1979, 1980, p.1.
41
42
43
Ferguson, Gael, Building the New Zealand Dream, 1994, pp.184-86.
44
Ferguson, Gael, Building the New Zealand Dream, 1994, p.185.
However the instability of financing was to prove a source of dissatisfaction for the
building industry and the undoing of such close links, as the Government did not always
increase loan limits as building costs increased in the later 1960s, and fluctuations in credit
availability affected the stability of house formation industries. By 1970, a Commission of
Inquiry into Housing recommended greater forward planning and assessment of demand,
and the establishment of a research centre to help smooth out fluctuations in demand.45
This was thought a more subtle means of controlling construction than the manipulation of
loan finance – the provision of which was criticised for being disproportionately dictated
to by overseas markets and the balance of payments at the expense of more favourable
responses to domestic demand and housing distress.
The provision of low interest credit to address housing shortages became as characteristic
of housing policy in the 1950s as the introduction of the first state houses had been from
1937. Certainly, state houses were still built and by 1960 they made up around 60,000 or
10 percent of housing stock,46 however an extensive list of unsatisfied applications for
state houses (despite over 30,000 having been built since 1937) and concern at the use of
government money on them, aided National’s victory in the 1949 elections.47 An
environment of extended war time rationing and land sales restrictions to accommodate
returned servicemen contributed to the capture of votes from an increasingly ‘prosperous
but constrained’ population at this time 48. The wool boom of November 1950 served to
quicken this prosperity49 and gave impetus to the promotion of home ownership as a
means to improve housing stock.
Three per cent building loans for families whose income was no more than one thousand
pounds a year, were introduced by the 1957-60 Labour government in February 1958.
This was at a time when the ruling rate of interest for first mortgages charged by private
lending institutions averaged 5½ per cent.50 The mortgage guarantee scheme introduced
in September 1953 was another example of the government commitment to credit
51
provision in the 1950s. It required the State Advances Corporation to guarantee
45
46
Thompson, D., Selfish Generations: The Ageing of New Zealand’s Welfare State, 1993, p.39.
47
48
Massey University Department of History, Modern New Zealand Politics Study Guide Three, p.34.
49
Anderson, L., Throughout the East Coast: the Story of Williams and Kettle Ltd, 1974, p.152.
50
New Zealand Official Yearbook 1960, pp.648-49. The income threshold for 3 per cent building loan
applicants was one thousand pounds a year, plus 50 pound for each dependent child.
51
New Zealand Official Year-book 1960, p.648.
repayment to financial institutions the difference between the normal housing loan and 90
per cent of the valuation of a property, to a maximum of 2,500 pounds. From 1959, the
Family Benefits (Home Ownership Act) also allowed for the capitalisation of the Social
Security Family Benefit with the lump sum contributing to the purchase of a family home.
Alongside subsidised interest rates, this policy had a significant redistributive effect
toward young adults and their families.52
The government began to withdraw from state investment in housing during the 1960s by
reducing the number of family benefits and rebated loans, although it continued
concessionary interest rates. Government lending had peaked in 1961, when 52 per cent of
all residential buildings completed were funded by the state but by 1972 state-funded
residential buildings dropped to 28 per cent.53 This was partly due to the cost of extending
home ownership in a fluctuating international economy, an environment of already
relatively high home ownership (and a corresponding decline in political pressure to
extend home ownership), growing concern about unrestricted urban growth, and a greater
inclination on the part of government to allow the credit market more scope.54
From late 1966 in particular, wool prices tumbled and the overseas deficit of 1967
quickly led government to limit state credit and available Reserve Bank finance. 55 The first
taste of the inflation that would be so much a part of the economic environment in the
1970s and 1980s was first apparent at this time and, in contrast to the relatively prosperous
early 1960s, there was also a net loss of migration, increased unemployment and a decline
in the number of housing ‘starts’.56 New Zealand’s economy continued to be vulnerable to
fluctuations in the wider world market through the 1970s and 1980s despite a recovery of
net migration inflows by 1970 and commodity boom in 1971.57 The oil price shocks of
1973 and 1979, and Britain’s entry into the European Economic Community (EEC) in
1973 were particularly challenging to economic stability.58
52
Thompson, David, Selfish Generations, 1993, p.90.
53
54
55
Massey University Department of History, ‘Modern New Zealand Politics,
Study Guide Four’, 1998, p. 15.
56
Gould, John, The Rake’s Progress? The New Zealand Economy since 1945, 1982, pp.117-18.
57
Ibid., p.123. There was a net inflow of 800 people in the year ending 31st March 1970.
58
Brown, Bruce (ed.), New Zealand in World Affairs 1972-1990, 1999, p.21.
The housing loan market had grown gradually between 1950 and 1970 with registered
mortgages numbering approximately 30,000 in 1950, 60,000 in 1960 and 75,000 in
1970.59 Thereafter growth was more rapid through the seventies, reflecting a general
inflationary spiral and increased demand for housing. Inflation contributed to housing
demands because it had the effect of making it more difficult to evaluate investment
projects and diverted attention from production to securing homes against the impact of
inflation. House prices increased rapidly, particularly between 1972 and 1973 as increased
migration contributed to heightening housing need.60 The number of building consents
issued in 1974 reached a historic high of approximately 40,000 at this time.61 In the
second half of the 1970s there was a massive outflow of immigration.62 This aided the
contraction in the mortgage market and home formation industries, with home building in
sharp retreat from 197563. Inflation, however, continued to rise.64
From 1962, moves to free up the economy and the private financial market can be detected
as the government budget abolished capital issues control and the Interest on Deposits
Order, which fixed the maximum rate of interest on deposits with finance and other
companies. Then from 1964, trustee savings banks were allowed to expand and trading
banks were permitted to set up savings banks, encouraging a diversification of the finance
sector. Banks were allowed to fix their own interest rates on deposits of more than
$25,000, which increased their ability to compete for fixed term deposits, and could invest
their spare cash in government securities from 1969.65 However, stringent limitations on
interest rates and dividends were put in place in March 1972 in an attempt to arrest the
wage/price spiral threatening to become firmly established during the early 1970s. Interest
rate controls and Interest on Deposits Regulations introduced in 1972 were removed and
revoked in 1976 and signalled a resumption of finance company growth.66 By 1984, at the
beginning of a decade of major economic reforms to address recession and encourage
efficiency through competition, controls on credit growth were abolished. The compulsory
59
New Zealand Official Yearbook 1998, ‘Mortgages: Registered and Discharged’ graph, p.458.
60
61
New Zealand OfficialYearbook 1998, p.464.
62
Gould John, The Rake’s Progress? p.142. There was a peak net migration inflow of 33.6 thousand in
the year
ending March 1974, 29.6 thousand in 1974/75; 6.6 thousand in 1975/76; and outflows of 13.7
thousand in 1976/77 and 22.3 thousand in 1977/78.
63
Gould, John, The Rake’s Progress? The New Zealand Economy since 1945, 1982, p.141.
64
New Zealand Official Yearbook 1998, ‘Consumers Price Index: 1914-96’, p.546.
65
Gould, John, The Rake’s Progress? The New Zealand Economy since 1945, p.126.
66
Gould, John, The Rake’s Progress? The New Zealand Economy since 1945, p.145.
ratio system requiring financial institutions to invest fixed proportions of their total funds
in government securities was halted the following year.67
The effectiveness of these reforms remains inconclusive with economic performance

deteriorating during the early years of transition and confidence lost following the stock
68
market crash in 1987. However, the expansion of the money market saw registered
mortgages peak at approximately 250,000 and discharged mortgages reach approximately
280,000 in 1990 - before declining sharply to a low of approximately 170,000 registered
mortgages in 1993.69 Thereafter the economy regained strength with unemployment falling
and inflation remaining low. The peak mortgage uptake in 1990 closely matched the steep
decline in average variable interest rates for new mortgages from the all time high of
19.85 percent in 1987 to 15.07 percent in 1990 and 9.81 percent two years later. Interest
rates had shown a continuous steady but gradual increase between 1955 (4.72 percent) and
1975 (8.47 percent), thereafter increased more rapidly toward the 1987 high. 70 Interest
rates remain below 10 percent in 2002.
Overall considerable change has taken place in the past half century, particularly in an
economic and demographic sense. From the 1950s, credit provision by government to
encourage private home increasingly replaced direct housing assistance and house stock
improvement by state house building. Gradual deregulation of the finance industry
accompanied increasing government withdrawal from mortgage provision following a
period of nurture for the speculative housing process through the Group Housing Scheme
from 1953. Interest rates followed a consistent rising trend from the 1950s to mid 1980s,
showing more rapid growth from the mid 1970s and early 1980s before declining
markedly post 1987. House prices rose rapidly through the 1970s as part of a persistent
general inflationary spiral that continued through the 1980s - not withstanding the volatile
fluctuations in migration during the early decade as well as in rates of building consents
issued. Markets and politics outside of New Zealand continued to shape local opportunity
in housing and business. General trends toward smaller section sizes, smaller households,
larger houses and increased migratory mobility within our largely urban and suburban
spaces have also had a significant influence on housing habitat.
67
68
New Zealand Official Yearbook 1998, ‘ Postscript to Professor Hawke’s Article’, p.369.
69
New Zealand Official Yearbook 1998, ‘Mortgages’ graph, p.458.
70
The New Zealand Official Yearbook 1998, ‘Mortgages: 1955-97’, p.458.
It is beyond the scope of this thesis to explain the changes the demographic histories of the
family and the greater variety in domestic patterns in recent years however trends toward a
decline in the two parent family, increasing numbers of persons living alone, Pacific
families with large numbers of children, and perhaps also rising costs influencing
difficulties in commencing home ownership and a rise in rental accommodation
particularly in the larger cities. 71
Land Agents and Industry Change
The idea that land agents provide a special perspective on and knowledge about housing
due to their working involvement and knowledge of the property market in which they
negotiate daily, is not without precedent in political or literary circles. While issuing
invitations for the National Conference in Housing held in Wellington in August 1953 to
encourage home ownership, Deputy Prime Minister Keith Holyoake would write to the
Real Estate Institute of New Zealand (amongst others) and, in keeping with the
Conference quest to ‘deal with the problem of housing, both from the point of view of
those engaged in the industry and for the people who want to own homes,’ would
cordially request their participation: ‘I believe that your Institute has an essential
contribution to make and the Government is anxious to have the benefit of your advice’, 72
71
Pearson, D., Spoonley, P. and Shirley, I. (eds), New Zealand Society: A Sociological Introduction,
(second edition), Palmerston North: Dunmore Press, 1994
72
Real Estate Institute of New Zealand Journal, 8:4, July 1953, p.2.
he persuaded. Studies of land agents seen to have a role in shaping access of individuals
and social groups to desired urban resources, and thus affecting life chances and
opportunities have previously been associated with what sociologist David Thorn has
described as Weberian informed analysis.73 ‘Advanced capitalism’ is such analysis being
increasingly identified as resting ‘on the process of consumption’. Merchant ‘middlemen’
providing opportunities for the kind of trickery that is the stuff of fabliau comedy have
long been of literary fascination - take the Merchant and his business associates or the
Miller in his dealings with his customers in Chaucer’s Canterbury Tales.74 In twentieth
century New Zealand, humour of this ilk has likewise been propagated and enjoyed in the
Real Estate Institute of New Zealand’s Journal, New Zealand Real Estate with, for
example, this tongue-in-cheek verse from an unnamed contributor in 1939,
I’m a Real Estate bloke and with customers joke
And commissions I never consider,
But my walls I adorn with the scalps of the shorn,
While I weep for the innocent bidder.75
Such simplism clearly does little justice to real estate professionals in all their diversity.
However a study of the changes in the working lives of land agents, with particular regard
to changes to the scales of commission real estate agents have been able to charge and
changing sales techniques employed between 1950 and the later decades of the twentieth
century, provides an alternative testimony to set against the change and continuity in
housing stock and policy outlined in part one of this exercise.
Many commendable information-gathering initiatives pertaining to the real estate industry

have been undertaken in very recent years. Although many such studies have few
precedents or equivalents in the 1950s, they provide a valuable reference point from which
to appreciate some of the considerable change that has occurred within the real estate
industry and a rapidly growing housing market since 1950.
In 2001, residential real estate agency practice in New Zealand provided employment to a
total of 16,175 persons, being 1596 principals (9.87%), 10,754 sales consultants (66.49%),
73
Thorns, David, ‘Urban’ in New Zealand Society: A Sociological Introduction (2nd edition),
Pearson, Spoonley and Shirley (eds.), pp.47-49. Studies of local authority housing officials,
planners, councils and councillors, town planning processes and procedures, banking and other
mortgage institutions, builders and property speculators were also said to have fallen into the
category of Weber informed analysis.
74
Burrow, J.A, Medieval Writers and Their Work: Middle English Literature and its Background
1100 -1500, Oxford University Press, p.80.
75
‘The Lighter Side’, New Zealand Real Estate,1:3, February 1939.
1315 property managers (8.12%) and 2510 administration / clerical personnel (15.52%). A
total of 1263 businesses operated from 1857 locations.76 New Zealand’s residential real
estate agency businesses generated gross revenue of approximately $1.24 billion of which
income from sales transactions accounted for 86.9 per cent of the total. 77 21.48 per cent of
these businesses operated within a gross revenue band of $250,000 per annum, 22.96 per
cent in the gross revenue bracket of $250,001 to $500,000 per annum, 14.08 per cent
between $500,001 to $800,000 and a majority of businesses (41.48 per cent) were located
in the gross revenue band above $800,000 per annum.78 In 2001, the dollar reward per
principal varied from an average low of $36,921 for businesses with gross revenue below
$250,000 per annum to a high of $189,620 for businesses with gross revenue above
$800,000 per annum.79 76,092 homes were sold in 2001, an increase from the 65,571
homes recorded in 2000.80
Comparative data of national revenue earnings and precise numbers of agents involved in
the real estate industry in the 1950s are not known, but rates of commission receivable are
outlined in subsequent paragraphs, and it is known that there were 826 members of the
professional association of real estate agents, the Real Estate Institute of New Zealand
(REINZ), between 1950 and 1951, 326 of whom were fellows and the remainder associate
members.81 A number of land agents operated outside organised networks at this time or
chose to join the rival Land Agents’ Association before the merger of the two associations
following the introduction of the Real Estate Agent’s Act 1963.82 By 1965, the ‘Institute’
could boast 1523 members, 295 of whom had come from the Land Agent’s Association
under this act.83
The ‘Institute’ had its origins in the Land and Estate Agents’ and Land Auctioneers’
Association of Auckland (Inc) founded in 191284 that merged with independent
76
Bevan, Robert, New Zealand Real Estate, 52:8, Sept 2001, p.17.
77
78
Bevan, Robert, ‘Interfirm Comparison’, New Zealand Real Estate, Sept 2001, 52:8 p.16
79
80
‘President’s Annual Report’, Real Estate Institute of New Zealand Inc 2002 Annual Report, p.2.
81
‘President’s Report for the year ending 31st August 1951’, REINZ Minutes Book 1948-54.
82
Real Estate Agents Act 1963, New Zealand Statutes 1963, Vol 1, Wellington: NZ Govt, 1964,
pp. 876-922.
83
Real Estate Journal, 16:1, January 1965, p.7. The Real Estate Journal had a circulation of 1900
in this same year (1965).
84
A chief business of annual gatherings in the formative years of the Institute was discussion of
legislation affecting land agents. The original Land Agents’ Act 1912 first required land gents to
be licensed and stipulated that the right of a real estate agent to recover commission was
associations of land agents in Wellington and Waikato in 1915 to form the Dominion
Estate Agents and Land Auctioneers’ Association of New Zealand. The name of the
Association was changed to The Real Estate Institute of New Zealand in 1922, and it grew
to comprise twelve regional branches throughout the North and South Islands of New
Zealand by 1940.85 Industry statistics of annual ‘property transfers’ have been retained by
the Real Estate Institute for the 1950s and amount to 57,935 in 1951, 56,600 in 1952 and
57,894 in 1953, for the year ending 31st March.86 However, these figures are likely to
include commercial property and land sales so it is not possible to accurately estimate the
number of residential property sales. REINZ members grew steadily in subsequent
decades to reach 2622 in June 1977 (with 3,084 salesperson certificates issued) and a high
of 3,084 (with 12,577 salespersons employed) by July 2002.87
1950 was the beginning of a period of buoyant trade for real estate agents that followed
the repeal of the Servicemen’s Settlement and Land Sales Act 1943.88 The purpose of the
Act, namely ‘prevention of undue increases in the price of land’ and facilitation of the
settlement of discharged soldiers, was the subject of considerable criticism and
dissatisfaction from land agents; although less for these espoused aims than for the delays
frequently experienced in having applications dealt with under the Act and the inhibiting
effect of the legislation on ‘proposals for cutting up large blocks of land for housing
purposes’.89 The repeal of the act was greeted with general enthusiasm,
‘We had no idea of the true value for any property – after all, we had 10 years to catch up with a
free market and we thought it would adjust itself slowly. How wrong we were. Prices soared and
the best way to find a price level was to offer the properties for auction’ (Ted Harcourt). 90
dependent on an appointment in writing for the service for which commission was claimed.
85
‘REINZ Income and expenditure account for the Year ending 31st August, 1951’, REINZ
Minutes Book 1948-54. In 1940, there were twelve regional REINZ branches: Auckland,
Canterbury, Westland, Poverty Bay, Hawke’s Bay, Nelson, Otago, South Canterbury,
Southland, Taranaki, Waikato, Wanganui and Wellington.
86
New Zealand Real Estate, 8:6, Dec 1953, p.2.
87
‘From Conference’, Real Estate Journal, December 1977, p.4 and Real Estate Institute of New
Zealand Limited 2002 Annual Report, REINZ: Auckland, p.7.
88
‘Land Act 1948’, New Zealand Statutes Reprint, 1908-1957, Vol 7, Wellington, NZ: NZ Govt,
1964, pp.874-922.
89
‘The Land Sales Act: New Burden on Estate Agents’, Real Estate Institute of New Zealand
Journal, 4:2, August 1946, p.5. ‘A very large portion of housing (once) supplied by so-called
speculative builders’ had had ‘operations effectively stopped and the community is paying the
price of Government interference and restrictions,’ complained the Real Estate Journal editor
in 1946. The Land Sales Act effectively froze land prices at 1942-43 levels.
90
Harcourt, Ted, ‘Early Days’, New Zealand Real Estate, Aug 2001, p.28.
Clause three of the Servicemen’s Settlement and Land Sales Act states that, ‘Where any
consideration has been given, paid, or transferred by any person in contravention of the Act, the
By 1953, the editor of the Real Estate Journal could write with some confidence that,
‘property values are back where they should be’, and that the real estate agent in particular
‘must feel their profession more soundly’ based - despite some ‘shortage of capital’. 91 For
agents, it was the beginning of the best of times.
The adoption of a collective tariff of commission for land agents in 1950 was another
significant milestone providing both a sense of post war security and greater political clout
for the Real Estate Institute. The move was embraced affirmatively by the industry,
despite the competitive constraints inherent in a national scale.92 Following significant
support for this movement at the REINZ annual conference in 1945, the Real Estate
Institute finally gained postal ballot approval from regional branch councillors in May
1950 and established a set scale of fees from which, thenceforth, there was ‘no authority
for any member to depart’.93 Commission rates for freehold property were set at 5 percent
on the first ₤500 and 2 ½ percent on the balance, with a minimum fee of ₤5. On sales
exceeding ₤50,000 commission was charged at 2 ½ percent on the first ₤ 50,000 and 1
percent on the balance. Set fees for arranging tenancies, collecting rentals, arranging
leases of farm properties, for exchanges of property, sales of licensed hotels, sales of
‘businesses, boarding houses, private hotels etc’, of leaseholds, of ‘subdivisions other than
farm land etc’ and auctions, were also specified and assigned specific charges in the ‘tariff
of commissions’ booklet ratified in May 1950.94
Prior to this, scales of charges were somewhat elastic, although not strikingly dissimilar to
the 1920s when one land agent has recalled the association of his hometown prescribing a
set fee of 5 per cent on the first ₤ 400 of freehold house value and 2½ per cent on the
amount or value of the consideration may be recovered by or on behalf of that person as a debt
due to him by the person who received the consideration’ (‘Emergency Regulations: Full Text of
the New Order’, Real Estate Journal 4:2, August 1946, p.19).
91
‘Editorial: The Market’, Real Estate Journal 8:3, March 1953, p.1. By 1956, however, the
years 1950-54 were criticised as a time of a ‘lending and spending spree’ and the then current
‘credit squeeze’ thought necessary for stability by some within the Real Estate Institute. (‘What
of the Credit Squeeze? Effects on Economy and Property Markets’, Real Estate Journal, 9:3,
April 1956, p.2).
92
Not all sales agents were paid on a commission basis as prior to 1950 the sales staff from
Barfoot and Thompson (Auckland) were paid a salary. In the mid 1950s salespeople were paid
40% of the commission plus petrol and use of a radio-telephone (‘Real Estate History’, New
Zealand Real Estate, December 2002, p.45.)
93
New Zealand Real Estate, 8:12, July 1955, p.2.
94
‘The Real Estate Institute of New Zealand (Inc.) Tariff of Commissions 1946,’ REINZ Minutes
Book 1948-1950.
balance. At this time, the difference in the amount of commission proposed could also
vary between regions and between agents, and the same property could be advertised by
95
rival agents at different rates depending on the commission each was claiming.
However, a uniform tariff schedule of charges had been introduced for the South Island of
New Zealand in 192596 and a National tariff was almost secured between the North and
South Islands in 1938,97 before it was resolved that the North Island, and the South Island
town of Nelson, would adopt a rate of 5% on the first ₤400 and 2 ½ % on the balance of a
freehold property, whilst the South Island maintained a slightly higher rate of 5% on the
first ₤500 and 2 ½ % on the balance.98
The scale of charges was subject to ongoing discussion and periodic refinement in later
decades, with new products such as share milking agreements or group house sales
requiring pricing, and other fees altered to ensure relativity with other professions.99 The
Real Estate Institute and Government continued to maintain their commitment to the
collective pricing contract, with rates set at 5% of the first $1000 and 2½ % on the balance
purchase price of freehold houses in 1971.100 But debate about rates of commission would
become most apparent in the late 1970s and early 1980s, as land agents continued to apply
pressure for commission to be reviewed (but not yet relinquished). The following statistics
presented to parliament in 1976 by industry representatives P. Oakley and D. Berryman,
for example, show that commission as a percentage of an average urban home of $802 in
1934/35 was 4.99%, in 1944/45, ($1620) 3.73 %, 1954/55 ($3778) 3.16%, 1960/61
($4204) 3.10%, 1964/65 ($6047) 2.91%, 1969/70 ($8327) 2.80% and in 1974/75 when the
average urban home sold for $25,471, 2.59%. Commission rates in Australia were also
shown to be significantly higher than New Zealand rates at this time.101
95
Rolle, R.H.,‘Land Agents of the 1920’s’, Real Estate Journal, June 1976, p.12.
96
‘Institute and Real Estate Agency Milestones 1900-2000’, New Zealand Real Estate
Commemorative
Issue: December 2000, p.16.
97
Real Estate Journal, 2:1, August 1939, p.13.
98
Real Estate Journal, 1:3, February 1939, p.8.
99
The Real Estate Institute of New Zealand Incorporated, ‘Scale of Professional Charges, 1 April,
1969 from Jim Harvey’s personal collection (Mr Harvey is Principal of Harvey Coxon Limited
(trading as Harveys) Hastings).
100
Real Estate Institute of New Zealand, 1971 Diary and Manual, p.10. Commission charged for
businesses for sale was set at 5% on the first 2000 and 2½ % on the balance of the purchase
price.
101
Pat Oakley, ‘Good Question: Whatever became of our fees?’ Real Estate Journal, December
1976, p.15. Letters were also sent to the secretaries of each member state of the Australian Real
Estate Institute to ascertain with what criteria and how often since 1935 they had revised or
expanded their scale, and their methods used to obtain the approval from government
departments (‘From Conference’, Real Estate Journal, December 1977, p.7).
The world wide shortage of oil and other international commodities had helped push up
housing prices to such an extent that the Real Estate Institute would caution agents about
being too open about house price rises in the early 1970s.102 A speculation tax was also
introduced to help solve what was perceived as the price rise problem in 1973. However,
increasing prices for petrol, motorcars, postage and advertising were said to have
significantly offset these earlier gains by the later 1970s, with those submitting the
statistics showing declining commission, maintaining that, although ‘escalating house
prices had ‘been presumed to take care of our escalating costs’, this was ‘not the case’ for
our ‘share of these escalations was significantly reduced.’103
The timing of the expression of such dissatisfaction was less opportune than it might have
been however, as the Real Estate Institute and Government were otherwise busily engaged
in the formulation of the new Real Estate Agents Act 1976. 104 The new Act was designed
to enhance the professionalism of the industry, and provided for the establishment of the
Real Estate Agents Licensing Board, which covered licensing of real estate agents,
approval of salesmen and disciplinary powers over agents and salesmen.105 A new
salesperson to licensee ratio also stipulated that no licensee could employ as unqualified
salesmen more than three times the number of ‘qualified’ or eligible persons.106
Salespersons also needed to pass a new preliminary examination and be granted a
certificate of approval before being permitted to sell real estate from this time.107
In 1977, however, REINZ appointed a special committee to annually revise the

commission scale108 and had meantime focused on alternative measures to aid industry.
102
‘Real Estate Years of the Century’, New Zealand Real Estate, December 2000, p.11.
103
‘And another opinion on the scale fee discussion’, Real Estate Journal, 27:6, December 1976,
p.23.
104
Real Estate Agents Act 1976, Statutes of New Zealand 1976, Vol 1, Wellington: NZ
Government, p.72. The 1976 Act remains in force in revised form in 2002.
105
‘The Annual General Meeting’, Real Estate Journal, Oct 1976, p.12.
106
A qualified person was defined as either a person eligible to hold a license or one who had
attained the age of 20 years, passed the examination for persons intending to become qualified
persons and had during the preceding five years, at least three years practical experience as a
salesman. A transitional provision pertaining to this ratio clause allowed that this did not apply
to current license holders until the application for license renewal in 1978.
107
‘From Conference’, Real Estate Journal, December 1977, p.4-5. It was at this time that a
committee was appointed to look into the establishment of a chair in real estate at Massey
University.
108
‘From Conference’, Real Estate Journal, December 1977, p.7. The Minister of Justice declined a
revisionary proposal to approve a scale of fees for real estate appraisals in this same year,
however, coming under pressure from valuers determined to protect their interests.
Numerous ‘how to sell well’ articles were written for New Zealand Real Estate recipients
and an emphasis on professional accountability and increasing ethical standards was
constantly reiterated. Any unsavoury public image land agents still laboured under was
thought to be best combated by agents taking it upon themselves to be well educated and
increase their participation in local community causes. 109
A REINZ advertising committee was also set up in 1975 which offered some
commonsense advise for land agents struggling to reduce costs at this time, including the
suggestion that,
The way to reduce advertising costs is to produce conditions where the necessity to advertise is
reduced drastically110
The advertising report went on to describe how a system of preferred or sole agencies was
one means by which this could be accomplished, by limiting the necessity for land agents
to compete so vigorously with their sales signs and newspaper advertising in order to
secure general agencies. It was also suggested in this article that in the future the real
estate agent might radically alter the three-way vendor / buyer / agent relationship, with
the buyer paying half the estate agent’s commission,
An alteration in the incidence of commission so that the buyer pays half the present scale and the
seller pays the other half of the present scale would be a the first step that would lead to a better
trading climate for real estate agents…This progressive step would better lead to a greater use of
the method of conjunctional selling…. which would encourage the approach by one agent to
another, with a view to matching the buyer or seller with the stock the other agent holds…. This
(advice) tends to indicate a realisation that turnover is more important that commission. Stated
another way, half a loaf is better than no bread.111
The struggle to reduce advertising costs was but one aspect of the difficult trading times
real estate agents faced during the mid to late 1970s, but in several respects this was also
an innovative times for industry. The importance of Multiple Listing Services (MLSs)112
109
Land agents had had their repute dishearteningly dismissed as wanting in integrity in several
Institute surveys, although this image was said to be improving (New Zealand Real Estate
miscellaneous issues).
110
‘Advertising and Efficiency’, Real Estate Journal, April 1976, p.7.
111
‘Advertising and Efficiency’, Real Estate Journal, April 1976, p.7.
112
Wofford, L. E. and Clauretie, T.M, Real Estate, third edition, John Wiley & Sons: New York,
1983, p.129, 471. Such a service basically involves a local organization of agents who share
listings with each other in order to increase sales opportunities. Members agree to split the
continued to grow in stature during this period, although the suggested switch to buyer
paid commission did not eventuate.113 The first of these organizations in New Zealand had
been formed in Auckland in 1957 and another formed shortly afterwards in
Christchurch114. In subsequent years they spread throughout New Zealand.
A significant increase in the use of sole agencies at the expense of general or ‘open’
listings can also be attributed to the late 1970s and early 1980s.115 This commission
controlling strategy grew in stature throughout the 1980s and 1990s and was the dominant
house sales method in 2001.116 Standard sole agency authority forms had been available
from the Real Estate Institute as early as the 1950s.117 Yet when submitting a paper at the
University of Auckland real estate licensees winter course in 1973, M Neill stated that, ‘It
is my firm opinion that the time for sole agencies is fast arriving in Auckland….118, which
implies that sole agencies were still rare at this time.
Hastings real estate company director J. Harvey considers that the push for sole agencies
first occurred in the early 1980s, marking ‘the biggest change’ in his lifetime. He credits
Moseley Real Estate with initiating the sole agency ascendency in Hawke’s Bay,
(They) had all these homes for sale and nobody else could touch them so there was only one way to
join them and that was to do the same.119
In Auckland, on the other hand, writer Chris Barfoot from Barfoot and Thompson
maintains their firm were the first to ‘shake the eastern suburbs’ in the late 1970s and
commission earned on such listings between the listing agent and the selling agent.
113
5% of commission was held by the Multiple Listing Bureau with 33⅓% of the balance going to
the listing agent and 66⅓ of the balance to the selling agent in these early years (Multiple
Listing Established’, Real Estate Journal, 10:3, April 1959).
114
‘100 Years Institute and Real estate Agency Milestones’, New Zealand Real Estate, December
2000, p.17.
115
With sole or exclusive agencies one agent has the sole right to be paid the total commission if a
house sells in the agreed listing period, and the seller agrees not to hire other agents. With a
general agency or ‘open listing’ on the other hand the house or property is listed with several
agencies and commission is paid to whichever agent sells the property – although with the
realisation they have a slimmer probability of making a sale and getting paid.
116
Massey University Department of Finance, Banking and Property, ‘Real Estate Consumer
Survey 2000 Preliminary Report’, p.35. 82% of a sample of residential real estate buyers in 2000
used a sole or exclusive agency listing. 9% had a general listing, 9% multiple listing and 1% did
not know (The sample of 4500 buyers were taken from residential sales reported in the REINZ
Sales Statistics June- August 2000).
117
‘Sole Agency Authority’, August 1953, REINZ Minute Book 1945-54.
118
‘Sole Agency and Listing Methods’, New Zealand Real Estate, August 1973, p.13.The concept
of sole agency was generally though to have arrived from the United States and Australia.
119
Interview with J.Harvey
early 1980s with their ‘innovative marketing’ of exclusive agencies.120 Gordon Meyers,
who worked at the firm during this time, describes the change,
We started with general agencies, set scale and commission, so if you sold something you knew
what the commission was going to be so there was really no need to sign listing …we made a
phone call – “Oh keys under the front door? Well how much do you want for it? What’s your name
and general area? What are your chattels and that sort of thing”. It was all over the phone and then
you’d go round to the place and the keys are under the front door mat or in the letterbox or in the
meter box or something like that…. Anyway then Belton’s came along and all of a sudden trained
all their sales people up, put them all on splits, commission splits so that they rewarded the lister
and so everyone could get a sole agency and you could get more commission. They trained them
how to get sole agencies and put them on open home programmes and stuff like that. So just turned
the market upside down…all of a sudden Belton’s who were pretty ordinary, were number one in
town.121
The rise of the open home during this same period also marked an important development
in the way the real estate industry conducted house sales. Meyers saw open homes as a
new means to connect with prospective buyers,
You used to get all your enquiry off ads…[now] it’s all open home based. Buyers come to the open
home, that’s how you meet your people.122
Open homes provided the opportunity to secure a direct sale on the day or through follow
up contacts. It also opened up a new social pastime for buyers throughout New Zealand,
slightly reminiscent of the ‘parades of (newly built) homes’ of the 1950s and 1960s’ that
had been organised to showcase new housing designs.123
Sale by auction, the extended form of sole agency most valuable to land agents, was also
perceived to have a far broader value in terms of generating buyer interest in the 1980s
and 1990s. Before this, the bulk of property auctions consisted of mortgagee sales or
deceased estates or property of high value on which it was difficult to establish a true
value. But from the mid 1980s when sole agency marketing started to gain a hold on the
120
‘Old Family Firm Embraces Change’, New Zealand Real Estate, December 2000, p.27.
121
Interview with G. Meyer.
122
Ibid.
123
Auckland Members Speak Up Against Sunday Trading’, New Zealand Real Estate, July 1964,
15:3, p.11.These ‘parades of homes’ had often been open to the public on Sundays to the great
annoyance of members of the Real Estate Institute, who faced prosecution for Sunday trade at
this time under the Police Offence Act 1927.
real estate market, the competitive factor of multiple buying interest, a finite selling day
and unconditional contract for the vendor combined to make auctions an increasingly
attractive option for vendors and agents.
There was, in general, satisfaction with a collective fee arrangement in the early 1980s, as
was illustrated by principals from two Auckland firms Barfoot and Thompson and Beltons
pointing out in 1983 that they would be prepared to operate under a deregulated fee
structure but were happy with the current system. Recent deregulation in New South
Wales had proved messy, with scales reimposed after a short period of time, and it was
suggested that a similar step in New Zealand would encourage more problems than it
would solve, creating hassles between members and the public.124
However change was imminent, and preparation for the introduction of the Commerce Act
1986 had a significant influence on the timing of the Real Estate Institute’s decision to
carry out a reform of real estate agent charges.
At the last Council Meeting the Scale of Charges subcommittee recommended that the scale of
charged be abolished from 1 December 1985 and in its place a guideline for professional fees be
adopted. This was approved by council. It is abundantly clear that our scale will be deleted when
the Commerce Act is enacted 1 April 1986.125
The Institute was in general acquiescent and thus supportive of the Act, although wary
about appearing before a select committee concerned with the Bill, a process which was
potentially ‘more detrimental to our profession than beneficial’ according to President
Peter Cook. He announced the decision to abolish the scale of charges at the annual
meeting of Delegates on the 14th of August 1985.
We believe the fundamental interests of the Bill go well beyond our profession and we would be
unlikely to succeed in changing anything. The Commerce Bill in its own right makes it quite clear
that it stands against the protection of all industries where there are collective pricing agreements.
This is a fundamental policy the government has adopted. It is so wide embracing we cannot hope
to make significant changes to the concept. We believe our members will be able to work within its
framework but it will make significant changes in agencies and perhaps in sole agencies….126
124
New Zealand Real Estate, August 1983, p.9.
125
‘Annual meeting of delegates proceedings’, 15/8/85, REINZ Minutes Book Aug 1985-July
1986, p.22.
126
Indeed, many within the industry welcomed the freedom for individual real estate
professionals to set their own fees including this 1985 contributor to New Zealand Real
Estate,
We have abolished forever the unfair scale of professional charges and replaced it with the
opportunity to, at long last, receive a fair fee commensurate with the services we are prepared to
offer’.127
Previously, the Institute had stipulated that ‘the scale of professional charges established
by the institute must be strictly observed by every member’ and members were unable to
‘indicate expressly or impliedly that their professional services [were] available free of
charge’.128 From December 1 1985 the withdrawal of the scale of charges left the
responsibility for charging up to the vendor and agent.129 For thenceforth, ‘the member is
responsible for ensuring that charges, whether by way of commission or other charges, are
fixed to give a fair and reasonable return for the professional services rendered having
regard to the interests of both principal and agent’.130 There was generally agreement with
the assessment that the Commerce Act was peripheral, and need not ‘essentially affect our
modus operandi’ at the August annual general meeting.131 Nevertheless, a public relations
campaign to enhance the status of REINZ was now thought to be essential because, as one
councillor cautioned,
we are on the brink of losing our scale. We are therefore entering a period of danger to our trading.
We are moving out from under the umbrella and going out into the cold and this is inherently a
dangerous time. We all know the economic state of the country, high interest rates and the effect of
trading.132
REINZ guidelines for professional fees were first to be applied when the scale was lifted
in December 1985. A basic fee of $300, then 3% on the first $200,000 and 1.5% on the
balance of the purchase price shown in the contract, freehold or leasehold was introduced.
1986, p.4.
127
New Zealand Real Estate, 36:5, December 1985, p.2.
128
Real Estate Institute of New Zealand, 1986 Diary and Manual, p.24.
129
New Zealand Real Estate, 36:5, December 1985, p.2.
130
Real Estate Institute of New Zealand, 1988 Diary and Manual.
131
1986, p.4.
132
1986, p.32.
This rose to 4% on the first $200,000 for ‘business sales’. Property sold either at or before
an auction, and during the term of sole agency attributed to such auction would be charged
a fee in accordance with the basic fee. The agent might in addition charge the vendor for
all auction advertising, flagging, disbursements and other promotional costs.133 It was
believed from previous experience of removing the guideline for rental commissions in
New Zealand and similar experiences in Australia, that such a scale would be needed to
act as an important rudder in an impending pricing vacuum:
We believe that unless we really stick together and come out very strongly on this point there will
be problems in the market place. In New South Wales, when they got rid of the scale in 1980, after
seven months they were in such a chaotic position that the government reimposed a maximum
scale. This is something we do not want to have happen to us in this country.134
Following the introduction of the guideline, the then Minister of Housing, Phil Goff
questioned the purpose and effectiveness of such a scale,
But is it possible to enhance competition by using a recommended scale of charges? If the answer
to the above is yes, why have they been increased to the recommended scale of fees when it was
based from the outset on a percentage of the property price and therefore protected against
inflation? I would be interested to have your comments.135
However, the Institute’s response to Goff’s enquiry is not known. The recommended scale
of charges had been debated during the August Council Meeting the year before, and K.A.
Bird had raised the issue of threats posed by the possibility of competition under the new
Commerce Act:
I refer back to the Commerce Act, it is not only a Bill that will create competition amongst
ourselves, and it could also allow competition from non-licensed operators. I wonder what thoughts
Council had given to combating competition should it arise?136
But this fear proved to be unfounded, and throughout the 1980s and 1990s there appears to
have been a steady increase in the fees received by land agents.137 The only direct threat to
133
‘Appendix to Council Minutes’ 8/10/85, REINZ Minutes Book Aug 1985-July 1986.
134
1986, p.23.
135
Letter from Minister of Housing, P.Goff to the Real Estate Institute, 11 June 1986, Appendix to
Council Minutes, 1/7/86, August 1985-July 1986, p.28
136
Ibid., p.5.
137
‘Real Estate Agents’ Fees 1981-1999’ graph, ‘Keep the Home Buyers Turning’, Consumer, July
2000, no. 394, p.29.
the industry competition when it did eventuate was short-lived. Real Estate Agents and
Lawyers (REAL) was established by a group of lawyers in 1999 and used affiliated real
estate agents for property selling. REAL’s commission (excluding GST) was set at $400
plus a maximum of 2.95 % of the sale price, and significantly undercut standard real estate
commission. The group provided links to 420 law firms throughout New Zealand and
intended to offer ‘one-stop shops’ for buyers around the country.138 But the company were
unpopular with the real estate fraternity who claimed REAL were calling into question the
industry’s ethical standards, and that their attitude toward the profession was generally
denigrative. The existing real estate fraternity then ‘blacklisted the lawyers who had
advertised the fact that they supported REAL’ and stopped referring clients to them. 139 By
adopting a strategy of “What will the market stand?” and maintaining or increasing prices
rather than competing on price they found they were able to compete on service with more
money coming in.140
I know that I raised fees to 3 %, then to 3.5% and then to 4% - all in the face of competition as low
as 2.2%. We had more listings than we knew what to do with. You must remember that this was
and still is in a context of “no sale no pays”.141
REAL were unable to compete on these terms and exited the house sales market in 2001.
A conveyancing bill proposed by Phil Goff that had sought to allow new groups of people
to charge for conveyancing of housing whilst allowing lawyers to charge commission for
housing sales in the late 1990s had not progressed as anticipated, and this may have had an
impact on the company’s demise. The revision of the Law Practitioners’ Act 1982
promises to address the role of lawyers in the property market in the future.142
In 2002, commission rates for agents varied across companies. A recent example of
charges shows a basic fee of $250 plus 4% of the first $250,000 of a house’s value and 2%
of the balance. Larger transactions (usually over $1million) are charged at a flat fee of 1½
% or 1¾ %. General agencies are still accepted by land agents but generally no advertising
is guaranteed on these listings.143
138
‘Keep the Home Buyers Turning’, Consumer, no. 394, July 2000, p.29.
139
‘Interview with G. Meyer.’
140
‘Interview with G. Meyer.’
141
G Meyer, Private correspondence, Jan 2003.
142
Auckland Law Society, correspondence with author.
143
Interview with J. Harvey.
Between 1950 and the turn of the century the real estate industry has grown in size (from a
sales force of less than a thousand in 1950 to over 12,000 in 2002) and in complexity. The
restrictions of early land court control gave way to allow a more buoyant market
throughout the 1950s and 1960s, during which period the REINZ provided a sense of
security, together with a unified voice that afforded the industry legitimate status as a
pressure group in housing politics. The strength and importance of this role would
continue through the more turbulent periods of trade during the late 1970s and early
1980s. Despite the challenges created by fluctuations in house price stability and dramatic
population growth and decline, these years proved to be innovative times for the industry.
Sole agencies first took hold and open homes became an integral part of the house selling
experience from this time. The use of auction as a marketing method grew out of the trend
for more tightly controlled commission and increased markedly, particularly from the mid
1980s. Deregulation of the scale of charges in 1985 modernised the industry, ushering in a
period of competitive brand and franchise growth, which reflected the general move to
deregulate and reform the New Zealand economy. Land agent experiences of changing
business practise during the second half of the twentieth century have both reflected and
shaped a changing, more market led, housing environment.
Conclusion
The desire of New Zealanders to own their own home has fuelled their ongoing quest to
find and purchase the perfect property. Between 1950 and the turn of the century the land
agent has remained instrumental in the fulfilment of this quest – a quest characterised by
its consistency and predictable potency. The perpetual movement of people from place to
place has been the lifeblood of the real estate industry, providing a constant source of
bread and butter for the real estate agent. However, a changing economic and social
climate has required the real estate industry to develop new means of satisfying the
demands of trade and consumer expectation, particularly from the late 1970s.
This exercise does not claim to address all of the economic and social influences that have
significantly affected the real estate industry or the housing environment in New Zealand
between 1950 and the turn of the century. Instead, Part One has offered a concise survey
of some significant changes in housing stock and policy in the second half of the twentieth
century. These changes, for example in rates of home ownership, growth of new
subdivisions and changing house styles and sizes, reflect various wider economic or
demographic trends, such as the availability of credit at favourable interest rates, growing
urbanisation and fluctuating rates of migration. Miscellaneous, one-off events, such as the
1951 wool boom, 1970s oil crises or 1987 sharemarket crash, have also had an impact on
housing accessibility.
Part Two has examined changes and continuity in rates of commission, and changing sales
methods used by real estate agents. It has, in particular, explored the rise in the use of sole
agencies and, from 1985, the deregulation of the land agent’s scale of commission, just
prior to the enactment of the Commerce Act.
The Commerce Act was designed to increase efficiency, and encourage enterprise by
opening up industry (including the real estate industry) to the effects of increasing
competition in the later 1980s and 1990s. In practice, however, competition from outside
the real estate industry has had little effect on rates of commission charged, whilst
competition between realtors within the industry has tended to focus on service provision
rather than on reducing commission rates. The industry has expanded significantly and
‘modernised’ in recent years, as technology has enabled global real estate companies to
operate locally, often through the acquisition of established local brands. Franchise
operations have become the norm144, often replacing the individual, small to medium-
sized, local businesses that were predominant in the 1950s.
In some respects the influence of the Real Estate Institute of New Zealand (REINZ) has
shifted in focus. Whereas in the 1950s it played a solitary role in linking real estate agents
from all regions of New Zealand, since the 1990s larger franchises have provided an
alternative focus of identity and unity (with attendances at company conferences and
training seminars at times exceeding those at events organised by the Institute). However,
the Real Estate Institute of New Zealand continues to occupy a pivotal position as a
political pressure group, ensuring that the interests of real estate agents are taken in to
consideration. Client recognition of a more educated, ethical, professional industry have
been enhanced through the efforts of the Institute, particularly through the establishment
of a licensing board, disciplinary process and set ratio of licensed to non licensed real
estate operators, since the enactment of the Real Estate Agents Act 1976. The Real Estate
Journal published by the Institute since 1938 has proved a valuable chronicle of all the
numerous events that have influenced the industry, as well as an indication of Institute
participation in, and perception of, politics pertaining to housing, property, ownership and
tenancy. The Consumers Institute has also proved an interesting additional source,
however as it deals with buyers interests in general while the Real Estate Institute is
chiefly concerned with property sales, the latter has provided a far greater body of material
for this exercise. By focusing on the concerns and challenges facing land agents it is
possible to view vendor and buyer interests in a wider context.
In the 1950s, New Zealand houses were predominantly sold under a general, or ‘open’
listing, and land agents throughout New Zealand charged fees in accordance with the scale
of commission uniformly adopted in 1950. This meant that land agents in the 1950s and
1960s generally advertised and competed to sell property without the security of payment
with greater frequency than in later decades, although competition to secure the initial
listing of a property increased in importance during the 1980s and 1990s. The repeal of the
Land Sales Act, 3 % building loans for low income families and capitalisation of the
144
International companies include names such as Ray White, L.J. Hooker, Richard Ellis, Raine and
Horne and Hones Lang Wootton. Local franchises include Harcourts, the Professionals, Century
21and Harveys. Big firms still trading on their own account include Bayleys and Barfoots
(Harcourt, Ted, ‘Early Days’, New Zealand Real Estate, Aug 2001, p.29.)
family benefit combined to impact positively on housing trade at this time. It was a safe,
secure and regulated environment in which the government exercised considerable
control.
At the close of the twentieth century, on the other hand, the sales process and housing
environment are significantly altered. The 1980s were a decade in which major
restructuring took place within the New Zealand economy, as New Zealand moved to
adopt policies of economic liberalisation. Government has withdrawn from its role as a
key provider of credit, and changes in employment structure have elevated business and
financial service sectors such as the real estate industry to new levels of public
prominence. The deregulation of the scale of commission in 1985 appears to have been a
positive move for the industry as a whole, although some individual firms may have
suffered from the increase in competition. Commission rates have increased steadily since
deregulation, apart from a flattening off period in the early 1990s, which coincided with
peak homeownership in 1991. An increase in the use of sole agencies, auctions and open
homes has further contributed to the changing face of the real estate industry.
In New Zealand the purchase of a home is generally the most significant and most
expensive one in an adult’s life, consuming on average a quarter of household expenditure
over a sustained period of time.145 It is the dream and expectation of many New Zealanders
that the purchase of a new property will provide them with an opportunity for a more
positive future. The land agent’s position as mediator between person, place and property
has provided a crucial constant in a fluctuating and changing economic and social climate.
Source material from such a perspective provides valuable insights into, and increases our
understanding of changes within the real estate industry; changes which go some way
towards reflecting the transitory nature of society as a whole during the second half of the
twentieth century.
145
www.stats.govt.nz. For every dollar of household spending, 24 cents were spent in housing in
June 2001.

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