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.