Australian Online Residential Property Ad Market

The Australian online residential real estate market is dominated by one player - realestate.com.au.  Since September 2000, realestate.com.au has been the most popular site in the country with domain.com.au consistently in second place.  realestate.com.au’s dominance of the Australian market can be seen in the following facts:

• An estimated 95% of Australian real estate offices advertise on realestate.com.au
• Over 70% of people visiting Australia residential real estate sites visit realestate.com.au - second place domain.com.au has only 32% of visitors coming to its site
• 72% of the Australia residential property portal page impressions go to realestate.com.au - second place domain.com.au accounts for 21% of page impressions
• 71% of the total session minutes spent on Australia residential real estate portals is spent on realestate.com.au - second place domain.com.au accounts for 17% of session minutes
• An estimated 60% of the spend of real estate offices on online advertising is placed with realestate.com.au - second place domain.com.au accounts for only 25% of the total spend

Over the years a number of new entrants have entered the market and each time they have failed.  The market is clearly a 2 player market with realestate.com.au being the leader and very profitable (51% EBITDA margin) while the number 2 player (domain.com.au) is estimated to achieves a 5 - 15% EBITDA margin.

Spend on Online Residential Advertising

Online advertising covers advertising by real estate offices on portal sites, the franchise group sites, SEM (Search Engine Marketing) and their own sites (web development).

Over the last 8 years, the online real estate advertising market (residential + commercial) has grown quite quickly.

$m	FY 2001	FY 2002	FY 2003	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008
Est Market Size ($m)	12	17	25	40	63	95	141	195
Year / Year Growth		39.9%	44.8%	61.3%	56.9%	51.4%	48.0%	38.6%

 

It is estimated that the total spend on online advertising was just under $200m in FY 2008.  Of this, residential online advertising captured around 90% - or $180m while commercial online advertising captured $20m.  The total advertising market for print and online is estimated to be around $1bn in FY 2008.

What is interesting, is that the REA Group, through its Australian operations (realestate.com.au, realcommerical.com.au and Web Design Services) is estimated to capture around 60% of the total spend.

Residential Offices	Est. Total	% Total	Portal Ads	Web Design	SEM/SEO
REA	107.6	60.4%	104.6	3.0	0.0
DOM	45.0	25.3%	45.0	0.0	0.0
Other	25.5	14.3%	10.0	12.8	2.7
Total	178.1	100.0%	159.6	15.8	2.7
Commercial Offices	Est. Total	% Total	Portal Ads	Web Design	SEM/SEO
REA	10.1	60.5%	9.6	0.5	0.0
DOM	3.0	18.0%	3.0	0.0	0.0
Other	3.6	21.6%	0.0	3.0	0.6
Total	16.7	100.0%	12.6	3.5	0.6
Total Online Ad Spent	Est. Total	% Total	Portal Ads	Web Design	SEM/SEO
REA	117.7	60.4%	114.2	3.5	0.0
DOM	48.0	24.6%	48.0	0.0	0.0
Other	29.1	14.9%	10.0	15.8	3.3
Total	194.8	100.0%	172.2	19.3	3.3

Residential Portal Sites

Nielsen Netratings provides good coverage of the residential portal sites in Australia.  There are two major players - realestate.com.au and domain.com.au and a number of smaller players.  In July 2008, Nielsen Netratings tracked 12 sites. These sites are:

Name	Publisher	UB	PI	TT (’000 secs)
Market Aggregate		5,292,483	693,668,860	10,449,801
realestate.com.au	realestate.com.au Ltd.	3,825,316	497,894,322	7,381,431
domain.com.au	Fairfax Digital	1,683,560	144,157,609	1,821,332
homehound.com.au	Homehound	366,280	7,637,753	162,940
realestateview.com.au	realestateview.com.au Ltd	267,914	9,373,952	118,369
reiwa.com	REIWA	141,086	6,284,299	250,661
myhome.com.au	myhome.com.au Pty	113,261	1,450,788	57,451
property.com.au	realestate.com.au Ltd.	42,554	775,405	29,267
aussiehome.com.au	aussiehome.com Pty Ltd	20,619	431,062	15,175
justlisted.com.au	Sensis	21,679	160,359	7,480
realestate.ozfreeonline.com	Infodial	7,353	48,769	2,449
propertyfinda.com.au	APN Online	3,262	29,873	1,904
domainprestige.com.au	Fairfax Digital	3,884	56,766	1,096

Note: UB = unique browsers (akin to a visitor), PI = page impression, TT = total time on the site

In addition, there are a number of other smaller players not tracked by Nielsen Netratings.  They are:

• hotproperties.com.au
• privaterealestate.com.au
• propertynow.com.au
• realestatefind.com.au
• realestateworld.com.au
• real-estate-australia.com.au
• yourestate.com.au

Source: REA Group FY 2008 Financial Reports, Nielsen NetRatings, PPW Analysis

Australian Residential Real Estate Market

The Australian residential real estate market has been extremely active over the last 3 - 4 years.

Transactions

The Australian residential real estate market has around 750,000 transaction each year. 

Agents and Agencies

There are around 30,000 residential real estate agents in Australia who work for around 9,000 real estate offices.

In Australia, it is the real estate office, not the agent, that has the prime brand in a market.

Of these offices, around 50% are independently operated while the other 50% are members of franchise groups.  The large franchise groups include Ray White, LJ Hooker, Raine & Horne, and Century 21.

Sales Model

In Australia, a vendor will approach a real estate office to sell their property.  The real estate office will propose either a 3% commission and will handle all marketing costs (around 60% of sales in the country) or will propose a ~2% commission and will charge the vendor a marketing fee of approximately 1% of the estimated sale price.

There is a high use of auctions in Australia to sell homes.

There are almost no buyers agents in Australia with buyers dealing directly with the selling agent to negotiate the final sales price.  If a buyers agent is used, this is almost always paid for by the buyer and not the vendor.

Advertising Model

There is a strong focus on newspaper advertising in Australia.  This is driven by the wide use, especially in the premium property areas, of vendor paid advertising.  That is, the vendor will pay for the advertising of the property separately from the commission they pay on the sale of the property.

It is estimated that the total advertising market in Australia is A$1.2 billion p.a. split roughly as:

• $820m on news paper advertising
• $180m on online advertising
• $200m on sign board, window cards, direct mail etc

There has been a progressive shift to online with areas such as share accommodation, rentals and low end properties disappearing from newspapers.

The major newspaper publishers are News Limited (part of New Corporation) and Fairfax