Trade Me Property, the leading property portal in New Zealand has announced that with effect from the 1st November it will charge all real estate agents a flat fee for each and every listing of NZ$159 (US$130).
This is a significant move by Trade Me Property removing the monthly subscription fee structure operational since 2005 and moving to a per-listing charge.
The existing structure operated by Trade Me Property which will be replaced by the new structure is a base subscription of NZ$250 plus NZ$124 per listing capped at NZ$999 per office per month. Within this structure there were volume discounts for larger groups. It was widely expected that having established this base + listing fee with a threshold cap back in 2011, the cap would be significantly increased annually, however to remove the cap completely and the base is a significant move.
It is estimated based on an annual total of around 130,000 listings by real estate agents this move will deliver an annual revenue from listings of NZ$21m up from a current revenue from subscriptions of around NZ$7.5m.
Trade Me Property is in a very strong position to implement such a revision to the subscription model. The portal attracts around 120,000 UV per day as compared to the competing site of Realestate.co.nz which attracts around 17,000 UV per day. Both sites represent almost all licensed real estate agents in the country.
Coupled with this dominance in traffic and a unique brand presence Trade Me Property has the benefits of a true retail price for listings of property for sale or rent as a function of a very strong FSBO business. Around 17,000 private sale properties are advertised on the site each year with a charge of NZ349 or NZ399 depending on the market value of the property. This FSBO is estimated to generate a base revenue of NZ$5m per annum.
Brendon Skipper – Head of Trade Me Property said that he believed that the new pricing structure would encourage real estate agents to pass on this cost to the vendors. He said that Trade Me was recognised as delivering the majority of leads of buyers and this move would strengthen the value of online real estate advertising, effectively saving the industry and the consumer money which has traditionally spent in the main on print advertising. It is estimated that currently only around 20% of industry expenditure is online.
Trade Me Property was cited as holding the greatest potential within the portfolio of the parent operation of Trade Me Limited in the latest annual report released last month. Trade Me holds a dominance within the sectors of household goods, new products, cars and real estate, whilst dominance of jobs still alludes them with Seek challenging them constantly for that mantle.
Trade Me is a listed company on the NZ and Australian stock exchange, with a current market cap of NZ$1.8bn. The company was founded in 1999 and privately funded until a sale to Fairfax Media in 2006 for NZ$750m. Between 2011 and 2012 Fairfax sold out of the company through an IPO. In the financial year to June 2013 Trade Me reported sales of NZ$164m with an EBIDTA of NZ$123m – a 75% EBIDTA Margin.