Predictions 2009 – Australia
January 3, 2009 by Simon Baker
On the surface, the Australian property portal market ended much the same way it started with realestate.com.au dominating the space and domain.com.au continuing to struggle in second place. We also had myhome.com.au come and go in the market while homehound.com.au and realestateview.com.au continue to show promise but with little headway. However, there were changes at the various players that could mean 2009 will be an interesting year.
Overall there is no reason why realestate.com.au wont end the year as the clear leader in online real estate marketing in Australia. We also expect domain.com.au to continue to be in second place – a fair way behind realestate.com.au. Finally we also expect there to be a group of tier 2 players continuing to exist in the market. However, we also expect there to be some subtle and not so subtle changes in the market. Here are our top 10 predictions.
Newspapers will continue to see a decline in real estate classifeds revenues
With the economic downturn impacting the Australian real estate market, agents are looking hard at where they spend their marketing dollars and are likely to realise that online marketing provides a much better return on investment than traditional print advertising. Therefore, we expect to see a continued decline in the amount spent by agents on traditional print advertising and the savings either going into the agent’s pocket or perhaps some being spent in additional online marketing.
realestate.com.au will increase its prices again
This is not exactly a bold prediction but one of necessity. Greg Ellis, the REA Group CEO, was recently reported in News Limited’s The Australian as expecting around a 50% increase in the REA Group’s revenues in 2009. realestate.com.au is the biggest contributor to the REA Group revenues and therefore as realestate.com.au already has around 95% of Australian agents using its services, the revenue increase has to come from a mixture of higher prices and agents purchasing more advertising products. However, as agents are looking closely at all marketing expenditure, they will probably not purchase significant additional advertising products and theefore the majority of revenue growth will probably come from price increases.
domain.com.au will close the readership gap with realestate.com.au
Recently the REA Group decided not to renew its distribution agreement with ninemsn which allowed domain.com.au to become the property section on ninemsn.com.au. This will have a two way impact – realestate.com.au will lose some of the traffic it had been gaining and domain.com.au will have an increase in traffic. Our estimation is that there could be as much as a net 400,000 to 500,000 change in the gap between the two sites. Historically the gap had been around 2m UB’s per month and it will probably close to around 1.5m UB’s in early 2009.
domain.com.au will get more aggressive with its local advertising
On the back of its deal with ninemsn, domain.com.au will get more aggressive with its advertising by focusing on the local markets – especially where they have market leadership and local newspaper support. In reality, online real estate advertising is not a national or global game but a local or suburban game. Therefore domain.com.au is likely to take a slowly slowly approach to beating realestate.com.au on a suburb by suburb basis – this is the only way in which they can eat into the large lead realestate.com.au has in the Australian market.
realestate.com.au will launch a much needed change to its look and feel
The realestate.com.au website has had a similar look and feel for the last 4 -5 years. However, last year the REA Group succesfully launched a new look and feel for its propertyfinder.com site in the UK and it is likely that this look and feel, or elements of it, will be transposed to the Australian site – giving it a much needed update.
RP Data will launch a new property portal site in the Australian market
In mid 2009 a 5-year non-compete agreement between RP Data and realestate.com.au comes to an end. RP Data will probably launch a new property portal site in the Australian market off the back of its property data business. The new site could seamlessly integrate property data and listings to provide customers with a single source of information on what is for sale, projected housing prices, and even neighbourhood information. RP Data may actually buy an existing site with myhome.com.au and homehound.com.au potential candidates.
realestate.com.au will enter the property data business
In response to RP Data entering the property portal market, realstate.com.au will enter the property data market. This could either be through a home-grown solution (unlikely) or through a partnership with one of the existing providers of property data in Australia. There is a chance that they will acquire an existing business, like Property Data Solutions, however some sort of distribution arrangement is more likely.
There will be consolidation in the Australian market
Tier two players such as homehound.com.au, myhome.com.au and realestateview.com.au could merge or be bought by a tier one player (most likely domain.com.au) as hard economic times bring operating reality to these businesses.
A new player will enter the Australian market most likely with a pay for performance model
A new site could launch in the Australian market that is free for agents to list on and would probably adopt either a trulia.com / globrix.com like model (pay for upgrades to listings) or propertyindex.co.uk type model (pay for leads). This site has the potential to gain rapid traction by playing on agent’s fears of continued price increaes by domain.com.au and realestate.com.au and the perceived increase in control of realestate.com.au by News Corp.
News Corp will increase its equity stake in the REA Group (realestate.com.au)
In 2008 News Corp, through its Australian arm News Limited, increased its equity stake in the REA Group to just over 60%. It would not come as a surprise if News Corp made a takeover bid for the complete REA Group business during 2009.
- Predictions 2009 – New Zealand
While 2009 was generally a quiet year in the New Zealand property portal market, there was one notable exception – the exit of the REA Group's allrealestate.co.nz and the subsequent marketing arrangement between the REA Group and its former competitor, realestate.co.nz. There now two main players in the residential property portal market and 2009 should see some interesting developments with this new market structure. Here are our top 6 predictions for the New Zealand property portal market....
- New Rural Portal for Australia
farmbuy.com has just joined the Australian property portal market offering a national selection of rural listings. The new portal makes use of agricultural region maps for each state along with options to search by farm type, land area and region. farmbuy.com also offers a Commonwealth Bank sponsored loan calculator and farm production calculators to find figures such as the price per hectare and stocking capacity....
- realestateview Retrenches Sales Force – What Now?
Sources tell Property Portal Watch that the complete realestateview.com.au sales force was retrenched last Friday. The sales team was responsible for selling realestateview advertising packages and the property data online subscriptions to real estate agents in Victoria, Tasmania and Sth Australia. With the sale team disbanded and only a small team left in the business, what does the future hold for realestateview?...
- Real Estate Added to Google Maps – What it Means for Australian Property Portals
In Australia and the US, Google has added properties for sale to its mapping site – maps.google.com. Users of Google Maps are now able to see a selection of homes for sale and rent plotted on the maps. These homes for sale seem to be sourced from Google Base – Google’s classifieds engine. It is free for anyone to upload a listing and this can be done through an online interface or through an XML data feed. The inclusion of property listings from Google Base onto Google Maps has some parts of the Australia real estate world abuzz with thoughts of the end of market leaders’ realestate.com.au and domain.com.au. However, while this launch is new and innovative in the Australian market, a lot has to fall in place before realestate.com.au and domain.com.au are truly affected by the “entry” of Google into the Australian real estate advertising scene....
- Google Real Estate in Europe – What is All the Fuss About? Lessons from Australia
The news yesterday that Google was “entering” the UK/European market sent the share prices of Rightmove and Seloger into a tailspin. The Seloger share price closed down 5.7% at €23.50 while the Rightmove share price was hammered a whopping 10.3% to 499.9p. So let’s look at what happened. An article by the Financial Times (Dec 2 titled “Google set to enter UK property market”) seems to have set the cat amongst the pigeons. The article stated that Google is in talks with British estate agents and that “experts” say that an entry by them to the market could pose a serious threat to existing property websites. The article didn’t talk about what Google was going to do and Google didn’t comment. So there is really not much to go on. So the only guide we really have as to what Google may do in the UK and Europe is what they have done in Australia. Did Google really have that much impact on the Australian market?...
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great piece.
i like the last point about News making another run for all of REA …and also see that as likely….
thoughts / predictions for the global / international property markets? that would be a great piece.
I am a Google Adwords Professional in Australia focusing on the Real Estate industry and just wanted to say what a great real estate blog you have.
I own the Australian real estate website PropertyNow and welcome and support the predictions you made above.
I think you hit the nail on the head with domain closing the gap…REA lose a little and domain gains a little…..net effect being double..
I might add that RPData might be well advised to look farther afield than just myhome and homehound if seeking acquisitions.
Our own site out ranks both of those websites for the primary keywords including “real estate”…at the time of writing. I say at the time of writing because search engines can be fickle.
Our site is not remotely as sophisticated as the 2 you mentioned, but that’s easily addressed.
Whatever the outcome of the real estate marketing machinations I do feel more competition is long overdue in the industry.
Congratulations on a well researched and compiled article and website
Andrew Blachut
PropertyNow
I would like to reprint your article on several of my real estate websites.
Would that be ok with you given that I will leave credits and your link back in tact?
I think that if RPData open up just another old property portal then they are wasting their time and money. To stand any chance of gaining significant market share they need to bring some new to the table to catch peoples attention and keep them coming back. Here is what I think RPData should do.
1. Create a new portal that is free for agents to list on.
2. Leverage their core business of property valuation and property data for revenue.
When people are searching for property they are crying out to get the kind of information RPData has such as sales prices in the area, demographic info, suburb profiles etc. US sites such as Trulia.com provide this kind of service with great success but for some reason no Aus site does. It is a huge opportunity IMO.
And if they need someone to build the site, give me a call
Interesting observation Craig. I totally agree with you that there isn’t a lot of point in rpdata building another portal like REA or Domain unless its significantly diffferent.
However, how will free agents listings ( as you suggest ) differ from both MyHome and HomeHound then?
I was also interested to see you build sites. Look me up sometime and maybe we will have some work that you can perform on my sites – Andrew
Hi Andrew. From an agents point of view there won’t be much difference as all sites will be free to list on. But from a buyers point of view there will be much difference. Why would someone use homehound when re.com.au has a lot more listings? The only reason would be if the site is much different and offers a lot more for the the buyer. Currently re.com.au and domain are very agent focused and designed to help agents sell houses, not help people buy houses. For example, when looking at a house on re.com.au I would like to see how much other similar houses in the area sold for. As a buyer I would flock to a site that caters for buyers.
BTW, last comment should be from Craig, not Andrew.
The real issue is how do you create a compelling consumer experience that has some viral qualities to acquire traffic cost effectively.
REA has increased its lead over domain even after the latter wasting a fortune on ninemsn.
Homehound and myhome have dropped out of the Hitwise property top 10
The shareholders of onthe house have burnt a large amount of money to get nowhere.
I think anyone thinking they can create a portal and get enough traffic to be competitive and profitable would need a pretty good strategy and a large wallet.
There are dozens of tryers all thinking they are going to do it but have no show.
By this I mean have rev over 7 figs
Simon, firstly great site, this is the first time I have visited. My interest in this sector is more from a technology perspective. But I am involved with companies that develop residential land, therefore its associated interest.
Anyhow, snoop, you mention onthehouse, does anyone have a view on this company. I checked them out some time ago and felt that they are beating an unsuccessful drum. I agree that any portal released on the Australian market should be radically different from existing business models.
Interesting discussion on RPData.
myrpdata.com.au provides us with a glimpse in the window of the kind of offering they would bring to the table. Better use of maps which would enable home buyers to look for properties for sale, and see what the price of the house next door went for.
My guess is that RPData would have been working on their site for a couple of years now. They would have something pretty market ready by now, and it would be in testing with focus groups.
The other interesting thought on RPData, is that REA will form a strategic alliance, or buy into RPData. This would block a direct competitive entry by a strong player well versed in the Australian market, and also provide REA with badly needed data products.
Out of all the potential entry points, regarding portals in the Australian landscape, RPData represents the best challenge.
They already have relationships with the majority of agents in Australia, they know the market, and they have the innovative backbone to offer some value added services to Consumers and Agents.
Lets not forget, REA only fully clenched the number one position in Australia with the purchase of property.com.au which was developed and owned by RPData.
The questions now are:
1. Can REA afford to invest in RPData to the extent to blocking a competitive entry? If so, where is the money coming from given their highly leveraged position in OS operations?
2. If REA does acquire (interest or full or JV etc..) RPData … then does this mean that REA is now in the data business? Their expertise is online. If the Hubonline retreat is any indication, REA’s core expertise is online advertising, not entering new segments of the real estate supply chain.
3. What will the REA share price be should RPData launch a portal in the Australian Market?
4. Should a new partnership between RPData and REA emerge, exactly what are the terms, and what impact do they have in relation to the use of Agents data? This question has never been fully answered.
5. What does REA have to bring to the table that would be of interest to RPData? These days there are a myriad of companies scraping websites for data. Why would RPData need to enter into an agreement for data, when it is freely available?
There may be other market entries for Australia in 09, however most will be based on some gimmick or long term promise.
Only RPData has the ability to make a successful entry in the market.
Any one have any thoughts?
Looks like Rea and RPDATA are friends.
A good move for REA. Not sure that this means they are ‘friends’
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