Australians are paying the most expensive advertising fees in the world to sell their homes online as a result of the market dominance of realestate.com.au and Domain, with the cost rising to as much as $4,000 for an inner-city listing.
The dominance of the News Corp-controlled realestate.com.au has prompted more than a dozen complaints to Australia’s competition watchdog, the Australian Consumer and Competition Commission, over the past decade from agents and industry disruptors, Guardian Australia can reveal.
REA Group is now a $27bn company and posted a net annual profit of $460.5m in August, driven by a 23% increase in revenues to $1.5bn.
This was partly due to average price hikes of 13% in the past year.
Mike DelPrete, a US-based industry expert, said the portal was seen as a leader globally, with operating cashflow per capita 16 times that of US-based property portal Zillow and almost three times that of its closest rival, Rightmove in the UK.
Australia is one of only about three markets globally where the home seller pays for the advertising costs.
“REA is the best in the world at this, REA is the most profitable real estate portal in the world … and organisations in every country around the world look to them for best practice – they are masters at this,” DelPrete said. “They are just printing money.”
In most other markets, the cost of advertising a property is negligible and is usually covered by the agent’s selling fee.
In the US, most home sellers do not pay to advertise their properties. Agents upload listings to geographically based, industry-owned databases called a multiple listing service, which are then accessed by consumer-facing search portals.
In the UK, agents cover the cost of advertising fees from commission fees, with the dominant databases costing an agent about £1,400 (A$2,700) a month for all of its listings.
In Australia, many agents sign up to “premiere all” advertising packages, which bind home vendors into buying the most expensive listing – close to $4,000 a property in inner-city Melbourne and Sydney.
Agents say this price is more than 50 times what it was 15 years ago for a top-tier listing.
Real estate agents are also raising the alarm about the company’s move into other areas of the property industry as the company seeks to cement its market dominance.
“They [REA Group] are getting deeper into the transaction rather than sticking with just advertising, and working hard to increase agents’ reliance on their services,” the Real Estate Institute of Australia’s president, Leanne Pilkington, said.
The growing dominance of the property portal also comes despite agents’ warnings in a 2016 application to the regulator that “the market will worsen” without intervention.
A spokesperson for REA Group said real estate agents could choose from a range of differently priced advertising packages, with a standard advertisement as low as $200. “REA’s per listing costs are priced to reflect the additional value delivered to vendors and agents in digital prime experiences,” they said.
“Our pricing structure reflects our focus on investment in new products, services, and features which support the consumer experience and drive consumer engagement.”
However, agents say the pricing structure pushes them into upgraded subscriptions, which are then passed on to home sellers.
A spokesperson for the ACCC said the regulator did not comment on complaints or potential investigations into individual companies.
“Generally speaking, restrictions on access to platforms such as realestate.com.au will only raise concerns under the Competition and Consumer Act where those restrictions lead to a substantial lessening of competition,” the spokesperson said.
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