NZ’ers are always interested to see what is going on in Australia and when it comes to online real estate we here at Realestate.co.nz are always interested to see what is happening on the other side of the ditch. At the moment it seems quite a lot judging by the front page headline from the Australian Financial Review.
Real Estate Agents ready to “revolt” reads the headline. It appears that after more than a decade of benefiting from the online transition of property buyers from print to the web, with the consequential financial savings; the industry is now revolting from what they see as exorbitant charges from the online market leader realestate.com.au (just for clarity there is no connection between our site realestate.co.nz and the Australian site of the same domain name).
Realestate.com.au (REA Group) has been a stellar success of web marketing, founded before the dotcom crash of 2000 it has grown from nothing to now be valued at in excess of A$1.6bn as an ASX listed company (the majority shareholder is News Corporation). The site holds the lion’s share of web visitors and around 95% of all listings. The chart below tracks the leadership in web traffic by realestate.com.au to its nearest competitor (Fairfax owned domain.com.au).
With this powerful position of dominance of the collective eyeballs of property buyers and the dominance of content, the company has over the past decade grown revenue from a couple of million dollars to well over A$160m. On average each real estate office in Australia pays realestate.com.au over A$1,000 a month and this scale of fee combined with the regularity with which they increase this fee now has the industry up in arms in a very public manner. The industry as reported in the article is looking to band together under what they are calling “Project Rebellion” to power an alternative website with which they hope to secure a competitive threat to submit realestate.com.au into reducing fees or potentially remove it from the market.
Could this happen? – the rich and comprehensive content of real estate listing is what property buyers seek, in theory they will go to the site that has the most content. That content is totally in the control of the agents, so in theory this is possible. However consumers are creatures of habit and have no idea what constitutes comprehensive content. A new website would have to spend a lot of money promoting itself to create awareness to say it was the “new home” of property listings online. At the same time the agents would all in unison have to stop using realestate.com.au, something many in the industry might be wary of doing as it is a very powerful and effective advertising medium for their clients listings with over 7 million monthly unique visitors.
The whole challenging conundrum is very well detailed in an article by Simon Baker in the Property Observer – his summation is that there is very little chance of this initiative having any legs. As a point of note Simon Baker is the former CEO of realestate.com.au and still remains a shareholder. As he states in his article, the publication of this story in the Fin Review last week knocked 5% off the market value of REA amounting to a paper depreciation of the company’s value of some A$80m – that personally impacts Simon.
What implications might this initiative in Australia have for the NZ industry?
In NZ there are really two key online real estate websites. Trade me Property has the highest level of website visitors. In the past month it received over 1.4 million unique browsers as measured by Nielsen online, by comparison realestate.co.nz received just over 400,000 unique browsers (as a point of reference there were just 5,766 properties sold in the month, which just goes to show the casual browsing appeal of property to kiwis). In terms of content realestate.co.nz holds the most comprehensive selection of listings from licensed agents – around 95% of all such listings. Trade me property has more listings in total on their site, however their licensed real estate listings are supplemented by a significant number of private sale listings.
Trade me Property is owned by Fairfax media whereas Realestate.co.nz is owned by two shareholders – the Real Estate Institute holds 50% and the balance is held by 6 of the larger real estate companies (Harcourts, Harveys, Ray White, Bayleys, Barfoot & Thompson and LJ Hooker).
In NZ there is a disparity of what each website charges for its services to its agent. Realestate.co.nz has a two tier subscription based on office size. Large offices (more than 6 active salespeople) are charged $300 per month with small offices $225 per month. The charges for Trade me are higher at $799 per month. Certainly the real estate companies in NZ do not pay as much as their counterparts in Australia, however when seen in perspective of the relevance of online marketing and how much it has made print media so redundant for property marketing, it is somewhat surprising that this reaction is happening at all.