May 28, 2025 • 34 mins
In this episode, we examine the ACCC’s investigation into REA Group and whether Australia’s leading real estate portal is misusing its market dominance. With vendors and agents under pressure from rising listing costs, we unpack the economics behind online advertising, growing use of off-market listings, and how competition (or lack of it) is shaping vendor behaviour.
We also touch on:
- The price disparity between Balmain and Mount Druitt listings
- Domain’s recent $3 billion acquisition by CoStar
- The May rate cut’s effect on auction clearances, now just above 50%
- Rising inflation figures and how they might influence the RBA’s next move
As mentioned in this episode, listen to our previous discussion around REA market dominance here.
As always if there is a specific topic you would like for us to cover, please reach out and let us know!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
All down, all silent, going, going, going, go on son
Congratulations.
Speaker 2 (00:07):
Welcome to the Current Market Insights podcast
brought to you by HarrisPartners Real Estate.
Each episode we chat with realestate author and industry
leader, peter O'Malley, todiscuss the current property
market conditions and provideinsights to assist you on your
property journey.
Speaker 3 (00:29):
Hello and welcome to another edition of Current
Market Insights.
I'm your host, kieran O'Brien,and with me, as always, is Mr
Peter O'Malley.
Peter, hello, kieran O'Brien,great to see you.
Peter O'Malley, always great tosee you.
I would love to kick offtonight's episode by talking
about a friend of yours, afriend of mine.
That's realestatecomau, betterknown as the REA group on the
(00:53):
ASX and REA, much like Domainfor those listening who aren't
necessarily aware one of themajor players, if not the major
player, in the Australianproperty landscape in terms of
listings and the website thatshowcases all the properties
that are for sale.
There has been an article comeout this week talking about REA
(01:16):
and how, in fact, they're nowentangled with the ACCC, the
consumer watchdog, around someunjust or potentially unjust
practices and particularly pricegouging.
I would love to start tonight'sdiscussion firstly, peter, by,
I guess, getting your thoughtsand insight into this story a
(01:38):
little bit about what actuallyis the kind of allegation here.
And then, what are yourthoughts, particularly given
that you have been in theindustry so long that you would
have seen the evolution of REA,you would have seen the
evolution of allegation here.
And then, what are yourthoughts, particularly given
that you have been in theindustry so long that you would
have seen the evolution of REA.
You would have seen theevolution of the landscape.
How does the kind of articleand what it talks about line up
with your experience andunderstanding of the space?
Speaker 1 (01:57):
Yeah, thanks, kieran.
Well, look you know.
Quoting the media AustralianFinancial Review, they wrote
yesterday Australia'scompetition watchdog is in the
early stages of a probe into theREA group, looking at whether
the News Corp-controlled realestate listings giant has been
misusing its market dominance tohike rates unreasonably.
(02:23):
The Australian Competition andConsumer Commission has been
quietly meeting with real estateagents and industry bodies over
the past few weeks askingwhether they have feedback or
issues with the $34 billion ASXlisted company.
So a bit of a quick historylesson.
(02:43):
In about 2002, kieranrealestatecom was going broke,
running at 40 cents a share.
Fast forward 21 years later andtheir share price is over $250
a share.
So from 40 cents to $250 ashare, it's actually 242.18.
(03:05):
Yeah.
Speaker 3 (03:06):
It dropped 3.5% after the probe was announced.
Sorry, yes, it's a bit of acollapse.
Speaker 1 (03:10):
So, yes, when I looked at the share price last,
that was around the time of theannouncement and that hadn't
sort of leaked through.
So yeah, it was sitting above$250 a share.
It was sitting above $250 ashare.
So $34 billion behemoth thatstarted in a garage in Melbourne
(03:30):
and that has come from realestate agents having the price
jacked up on them annually,without fail, essentially for
over 20 years.
Without fail, essentially forover 20 years.
The only times that therealestatecom that I can
remember did not hit the realestate industry with a savage
(03:52):
annual price increase, infairness to them, was during the
2008 global financial crisisand during COVID.
Speaker 3 (04:01):
Oh, they're very kind .
That is kind Well look fromrealestatecom's perspective.
Speaker 1 (04:09):
if you increase prices and the customers pay it,
that's fair terms of business,Because confirmation bias right.
Yeah, and the reason that realestate agents have just
continued to pay these priceincreases was a couple of
reasons.
The first is the legacy ofprint.
(04:30):
Real estate agents were used tohaving vendors fund the
campaign under a vendor paidadvertising model back in the
days of newspapers, and at thattime they were asking vendors to
fund a campaign.
This is back in 2000, 2001.
Fund a a newspaper campaign,whether it be the local inner
(04:52):
west coria, wentworth, coria orthe saturday sydney morning
herald, to the tune of anywherebetween eight and thirty
thousand dollars yeah when Ifirst started in real estate in
2000 as a 23-year-old in saleshere in Balmain, I would
regularly meet professionalsthat had spent $30,000 on an
(05:15):
advertising campaign for theirauction failed, not got a bid,
and said, well, that's just badluck, that's how it goes some
days, that's madness, madnessand I was just gobsmacked that
at that point that that peoplehad that sort of money to burn
and then the internet reallybecame dominant.
it clearly existed in 2002, butpeople worked out by 2005, 2006,
(05:38):
that there was absolutely noneed to be advertising in
newspapers anymore and, andslowly but surely, you know the
big broadsheet Sydney MorningHerald shrunk and you know your
domain lift-out, slowlydisappeared and became down to
nothing.
And the Wentworth Courier inthe eastern suburbs went from
500 pages to I don't even knowif they print that thing anymore
(06:00):
.
Speaker 3 (06:00):
I've seen it on doorsteps in Paddington.
It definitely does.
I don't know how often, though.
Speaker 1 (06:04):
Yeah, but all of these two media companies and
people that produce thesepublications was called the
rivers of gold.
Yeah, and then the internet tookit all away and slowly but
surely over the last 20 years,companies such as news limited,
who own the the controllingstake in realestatecom, and
(06:25):
Fairfax, who own Domain, andothers, have sought to transfer
the revenue that was lost fromnewspaper advertising back
across to internet sales, andthey've achieved that.
So that is why realestatecomhave got away with putting such
savage price increases annually,year on year, on the real
(06:48):
estate industry because the realestate industry were
conditioned for it.
It's in their DNA and they'vegot a mentality.
98% of the industry has amentality.
I don't really care whatrealestatecom charges anyway,
because the vendor pays it.
Speaker 2 (07:02):
Yeah.
Speaker 1 (07:04):
And that may be the tipping point where the
regulator has now stepped in,because realestatecom has become
so powerful that you can'tplausibly market a home anywhere
in australia without being onrealestatecom.
So whether it's the agentselling the advertising to the
vendor or the vendor insistingon it through realestatecom, you
(07:25):
have to be there and the costsare extortionate.
So an internet ad in Australiais probably over double, if not
triple, what a real estateinternet ad costs anywhere else
in the world.
Speaker 2 (07:37):
Yeah.
Speaker 1 (07:38):
And people just line up to pay it blindly.
Speaker 3 (07:42):
I feel like that's a common thread perhaps just in
Australian real estate ingeneral.
Everyone just kind of acceptsso much about, you know, the
real estate market broadly.
It's overpriced, it's this,it's whatever.
You know all those kind ofthings that go around.
But you know Australians justgo.
Oh well, that's the way it is.
You know we live in a veryexpensive country and you know
the economy's propped up on realestate and you know the status
(08:04):
quo is just kind of maintained.
We will run through, becauseI've looked into the numbers for
a couple of listings and ads tojust get a sense of what kind
of value we're talking abouthere.
The article itself talks abouthow they talk with Tim McKibben
who is the CEO of the RealEstate Institute in New South
(08:25):
Wales, and he talks about howyou know you can't list for any
less than sort of $5,000 onrealestatecomau now as a general
kind of sense.
And they talk about in thearticle that in 2009,.
So only you know whatever thatis, 16 years ago it was $75 to
put a listing on reacom, right,so $75, everyone would have
(08:49):
jumped aboard.
As you say, you know print'sphasing out, internet's taking
over, so there's this masstransition and it seems so
appealing.
You know, it's cost effective,it's got some appeal, it's easy,
it's portable, it's fast, etcetera, et cetera.
Speaker 1 (09:01):
If you can believe it .
On that point, as late as 2008,we were having to convince
certain vendors no, you don'tneed to spend $1,000 on a Herald
ad for Saturday morning.
Speaker 3 (09:14):
I'm not surprised, honestly.
Speaker 1 (09:17):
As you just say there , the $75 realestatecom ad.
It was a bit more than that.
He's got extremities there inhis two examples five thousand
dollars to list and seventy fivedollars back, way back when it
was never that cheap and it'snot quite that expensive now,
but but nevertheless.
Um being on the internet forthe entirety of the campaign in
(09:39):
2008 was a fraction of athousand dollar,000 ad in the
Herald, but we still had toplead with people not to waste
their $1,000.
And in the end it was like ifyou want to spend $1,000, spend
$1,000.
And I'd ring them up on Saturdayafternoon.
I'd say look, I hate to saythis, we did not get one inquiry
or one person mention your adand I did that not to rub salt
(10:02):
into the wounds, but I didn'twant them ringing me the
following saturday saying let'shave another go.
Yeah, because the, thepurchasing market had clearly
migrated from from the saturdaymorning herald or the, you know
the in the inner west here, theinner west courier, to being
completely online.
They started domain wasdominant early um and we're
(10:23):
running at about 50 50 nowbetween realestatecom and Domain
in the inner west.
The further you go into thesuburbs and when you go into
Queensland.
Realestatecom is all dominant.
Speaker 3 (10:35):
Yeah, look, I'm glad you raised that point because I
actually wanted to sort ofswitch over to that.
I seem to recall years ago Igrew up in, I grew up in eastern
suburbs and I seem to recallthat if you were doing anything
in property uh, you know, I wasin randwick you had to go
through domain.
That was kind of the.
The thing it was, I think,always kind of painted in my
(10:56):
memory anyway, is, this was themore premium prestige kind of
publication and you know, ifyou're in domain, that was a
house that would sell well andpeople, the right people, would
pay attention and as you say nowin the inner west it's maybe 50
, 50.
Maybe that's transitioning aswell.
The article here says that uh,domains market cap is now only
(11:17):
one-tenth of reas.
Now obviously that's in valueas well as we.
We could assume, uh, or youcould maybe extrapolate that
that's also talking aboutexposure, but I don't think it's
quite that clear cut.
Speaker 1 (11:29):
Well, where it comes from is.
The Americans have just boughtDomain for $3 billion.
Yes, I saw that and asdiscussed, based on the day this
article was written, when therealestatecom share price was
$258, I think it was that valuedthe company at $34 billion, so
yeah.
Speaker 3 (11:46):
Yeah, exactly one-tenth.
I find it interesting and Ithink it's important to note
that, if you know, rea, whilstundertaking these predatory
practices, are doing so whilealso dominating the space and
potentially convincing consumersthat they don't have an
alternative.
You know, know, if you want tosell your property as as a
(12:08):
vendor, then what do you do ifyou don't want to pay those
prices?
Speaker 1 (12:10):
look, I didn't want to interrupt you before, but
when you said as australians, wetend to just accept these
things at face value.
And the point that I wanted tomake around that one, kieran,
which is in sync with whatyou've just said there is, is
that Australians don't quiteaccept it at face value.
But real estate salespeople arehighly effective and highly
(12:31):
convincing and when youinterview four agents over a
month before deciding, one ofthem gets the listing and all
four highly effectivesalespeople tell you that you've
got to be on realestatecom andthe rates are fair, you're
likely going to go with one ofthem.
Speaker 2 (12:47):
Yeah.
Speaker 1 (12:48):
Now, if people want to know what solutions or
alternatives the industry'scoming up with to try and get
their head out of the noose thatthey've put themselves, in well
, that solution, which mostpeople would readily recognise,
is off-market listings.
I said inside real estate thatoff-market listings is not an
effective sales strategy.
(13:08):
It's brought about by the realestate industry trying to avoid
heavy website portal costs,particularly when they've got a
fair idea of who the likelybuyers are going to be anyway.
So, as a real estate agent,there's a.
there's a massive moral questiongoing into different home
(13:28):
sellers houses saying I need totake five thousand dollars off
you to find buyers for yourhouse, and then all of the
buyers that walk through thehouse you know anyway yeah and
are on your database, and youcan let them know about the same
house by sending an email whichcosts nothing, but instead
you're sitting in a vendor'slounge room asking them for
$5,000 non-refundable to sendthe same email through
(13:49):
realestatecom.
Yeah, or domain.
Speaker 3 (13:53):
Of course, or both right, because more often than
not, just because REA isexpensive doesn't mean domain is
cheap.
On the flip side, they're bothexpensive, rea just seem to be a
little bit more aggressive.
Demand is cheap.
On the flip side, they're bothexpensive, rea just seemed to be
a little bit more aggressive.
To give some, I guess, somecontext to our listeners, as I
said, I went through and had abit of a look at some of the
costs to list and advertise someof these properties and one of
(14:15):
the things that has becomeapparent in the article, but
also just in our experience, isthat the listing cost and one of
the reasons they're beinginvestigated being investigated
in fact is that the price isdifferent depending where you
list.
So if they deem that yourproperty is in a premium
location, you get a premiumprice tag attached, which you
know doesn't surprise anyone.
But you know, I'm thankful thatthe watchdog is actually
(14:37):
investigating this and trying todo something about it.
But to put some context to that, I I just looked up very
briefly.
It's a list of property inMount Druitt, so I just picked
something out west You'relooking at.
You know, kind of baseline $300to get it online and then
another $1,700 to just kind ofget it to show for people.
Then if you want to do a properad which is the vast majority
(14:59):
of what you know agents aretrying to sell to their clients
you're looking at $5,500thousand roughly, which is a lot
of money in mount.
Drew it in mount, drew it right.
Come to balmain, the flip sideof that.
You know obviously where we'rerecording this.
You, you still have the, thesame kind of base 300 but you're
suddenly looking at 2300 justto get it online and visible and
(15:22):
then to get it to the same sortof advertising space as the
other one.
It's over 7 000.
So we're talking the same sizead, the same, you know, content,
the same pictures, whatever itmight be, nothing extra added.
But there's, you know, abouteighteen hundred dollars price
difference between the two,which makes sense to us because
we've been in the industry for awhile.
(15:43):
But it's absolutely absurd whenyou think about the reality of
that because, as you say,everyone's on real estate or
domain, anyway People areaccessing this.
Is it really necessary to spendover $7,000?
Speaker 1 (15:55):
just to get your pictures in front of someone.
What you've outlined there iswhy they're being investigated
for price gouging.
We mustn't say they have pricegouged or anything like that.
They're being investigated forit.
Speaker 3 (16:06):
We can't dispute the discrepancies, though, that the
prices are different, but wecan't prejudge them either.
No, no, but you can't dispute,they're different.
Speaker 1 (16:12):
Yeah, look, they're coming for you, not me, that's
fine, because you've said allthe nasty things about them.
But look, you know, we could alldraw our own conclusions from
what you've just read out thereas to what's happening and it's
a real case, generally speaking,of if I can charge you more and
(16:34):
you can afford more, I'm goingto hit you for more.
And because we are heading froma duopoly between domain and
realestatecom and, unfortunatelyfor all of us in the real
estate industry, we're quicklyheading toward a monopoly, where
it you know, realestatecom areessentially scorched earth.
They've just blown all of theircompetitors off the park.
(16:56):
Where does that sort of pricingbehavior stop?
And I think that is why theregulator is stepping in now,
because if you want any evidence, if you want any evidence of
how powerful realestatecom isbecoming and what a threat they
are becoming to the realtor inthe process, the adjunct of this
story is that the Ray Whitegroup and John McGrath
(17:21):
investigated buying domain orgoing into business with domain
to help give them teeth in theirbattle against realestatecom.
Those discussions apparently noparty's confirmed it, but it's
in the media.
(17:41):
This All these discussions werestarting before the American
company is it Constar, costar?
Costar came in and took outdomain.
Yeah it's for a bargain pricerelative to their exposure
relative to the share price ofrealestatecom.
Speaker 3 (17:59):
Yeah, it's an interesting acquisition?
I I certainly wonder.
Because CoStar?
I had a quick read about themas a company.
I'd never heard of them, to behonest, but I'd certainly heard
of some of their brands.
So you know, costar owns a lotof the very big portals in the
United States, owns On theMarket in the UK a very, very
large portal.
They own Matterport, which isone of the imaging kind of
(18:21):
companies used to do themajority of real estate, which
is one of the imaging kind ofcompanies used to do the
majority of real estate, likethey're a big real estate prop
tech group, uh.
So it'd be interesting to seewhat they do with domain and
whether or not they find a wayto revitalize.
I guess the final point I'llmake on this is, as you know,
someone who looked after thereal estate account for your
business for a few years.
One thing that is 100 true, uh,is that they will increase
(18:43):
prices year on year by 10% to12%, without any question.
And the sad reality is, whenthey're doing it to you, they're
doing it to other agencies andother individual agents out
there and those costs aregetting passed on and they know,
as you say, while they've gotthis potential monopoly.
They will just continue totighten the screws and tighten
(19:05):
the screws, and tighten thescrews and unfortunately, I
don't think agents have muchchoice but to just pay and keep
going.
Speaker 1 (19:11):
The only choice available to agents is what is
happening here.
So what I'm detecting andyou'll never really know but the
real estate industry whilstthey might be all shaking hands
with their realestatecom accountmanager, there's a, there's a,
there's a underground swell herefrom the real estate industry
(19:33):
that are feeding the, thecomplaints and the information
to the regulator as to what'shappening.
This is, this is headingtowards battle of survival for
the industry, because we areheading where you think about
how big the real estate industryin Australia is, it's nearly
all working for Rupert Murdoch.
(19:53):
We're nearly at that point.
I'll tell you now.
We're on track to go that way,on the trajectory we're on.
Speaker 3 (20:00):
Oh, absolutely.
I guess I've got a question foryou and this is a little bit,
uh, hypothetical but do youthink that the rea's ultimate
goal is to continue to work inthe space to eventually just
remove the agents altogether andeffectively price the middleman
out and create a platformthat's, you know, utilizes ai
tech to be self-sufficientwithout the agent needing?
Speaker 1 (20:23):
to be involved.
Look who knows where it's allgoing with AI.
So I don't know where it'sgoing with AI.
Ai could be realestatecom'sbest friend and final frontier,
where that's the final plankthey need in place to wipe the
agent out of the process.
Or AI could be the exactopposite, where that's the reset
(20:49):
that the real estate industryis hoping and praying comes
along again because real estateagents using the VPA model,
which is the media company,charge us a lot of money.
We go out and sell it to theconsumer.
The consumer pays.
We don't feel it because wetake five thousand dollars off
kieran and give it to fairfax orrealestatecom or domain or
(21:12):
whoever it might be, and it'snot really our cost, it's the
consumer's cost.
And then the internet wiped allthat away yeah and real estate
agents were off the hook.
So what did they do?
Speaker 3 (21:25):
Started all over again.
Speaker 1 (21:26):
Just jumped back on the hook.
Yeah, so I always say about thereal estate industry I'm sorry
to my industry colleagues forthis, but the real estate
industry is full of highlyintelligent people, extremely
good operators.
Individually and as an industry, it's completely and utterly
stupid.
Speaker 2 (21:42):
Yeah.
Speaker 1 (21:43):
So you don't see this in America, rupert Murdoch
having this business inAustralia, and and and Lachlan.
They've tried to replicate thismodel in America, but the real
estate industry has held controlof itself.
So in in America they're verycollegial between themselves,
the major real estate brands,and they don't let themselves
(22:05):
get on the hook like theaustralian real estate industry
is.
Speaker 3 (22:09):
So they've never been subjected to this sort of
pricing that you've justoutlined there yeah, yeah, and I
think too in america it's muchmore collegial too between
agents individually, right, sothey're kind of using that's
right a buyer, seller, agentmodel.
One controls some listings, onecontrols others.
Like it's not a yeah, you don'tjust go to the marketplace and
say I want to buy that from theagent who's selling you.
(22:30):
You engage an agent to work foryou and that becomes a process,
right?
Yeah, look, it's interesting tosee what will happen.
I I think this is overdue and Iwill for our listeners.
I will dig back, because youand I spoke about rea on a
previous episode of the podcastand we did talk about their
dominance and how people werelooking to shift away and and
the one, the one advertisermodel.
(22:51):
We did discuss that previously.
So, if I do, that's right.
Yes, I'll find that episode andI'll link it.
So there is a bit of contextthere.
You know, we can always say wespoke about this a long time ago
, which we did uh.
But I'll be interested to seebecause I think the industry
needs this uh to reset, becausethe way it's storming forward at
the moment it really is, youknow, it's ignoring CPI, it's
ignoring cost of living.
(23:11):
This is just charging forwardwithout any regard for, you know
, what the end consumer has topay.
Speaker 1 (23:16):
Oh, that's right.
Well, it just is.
It's unjustifiable, that's theword.
Speaker 3 (23:21):
Nothing's changed on their platform.
You're just paying to continue,as is right.
Speaker 1 (23:25):
Look, I'd say it's modestly improved and there's
features there.
I wouldn't say that when you'reon the platform you call it a
bad platform.
You can see the user experienceis there, but have costs
increased in line with therevenue growth of experience?
No, costs are well behindwhat's happened there.
But basically the real estateindustry going back to the point
(23:49):
we were discussing cannot relyon AI giving it a second chance
at a reset, like the internetdid in the early 2000s.
So what is happening before?
Realestatecom are a completemonopoly, uncontrollable.
The real estate industry hasgone to the regulator and said
this is now on an untenable pathand the reason I point that out
(24:11):
is that when you're sellingyour home and you interview four
agents, they're allenthusiastically selling the
value and the virtues ofrealestatecom because they have
to yeah but behind the scenes.
The real estate industry isscreaming about this and, as a
(24:35):
consumer, you need to separatethe pitch that the agent's
giving you and they want yourlisting and the reality of
what's going on behind thescenes.
Why don't realestatecomstrongly encourage private
vendors?
Because that would very quicklyeducate the market how much
smoke and mirrors there are inall of these costs.
Speaker 2 (24:52):
Yeah.
Speaker 1 (24:52):
When we go back to your Wentworth Courier landing
on the doorstep in Ramwick.
I accept there was a printerinvolved.
There was a delivery involved.
Unfortunately, some weeks itwould get washed out if it
wasn't put in the.
You remember the plastic?
Speaker 2 (25:05):
sleeves that would come in during winter.
Speaker 1 (25:07):
Still is.
So you could see hard-coredcosts in that, which made it
slightly justified.
But, as we've just discussedhere, the cost structure, or the
increased costs that thesewebsites would have experienced
over the last 20 years, is well,well below the increase that
they've extracted from the realestate industry and vendors who
(25:30):
are leasing and selling theirproperties.
Speaker 3 (25:33):
Yeah, look, as a final point, I think my
observation of them as a groupis that the website is making
money for their broaderendeavors.
Right, it's a prop tech company.
Now.
They're not just a listingplatform.
They're buying up differentcompanies who do all kinds of
things in the space.
You know, they do all marketresearch, they go, you know
whatever it is.
So I feel like those costsactually are just helping to
(25:54):
funnel their r&d arms andwhatever else they're doing
behind the scenes and look, timewill tell as to whether or not
that is beneficial to theindustry or not it's becoming an
octopus.
Speaker 1 (26:03):
There's no doubt you know absolutely uh, two years
ago they had a 20-year deal withone of the data house providers
and that was pushed to the sideand they opened up their own
data arm.
Speaker 2 (26:18):
Yeah.
Speaker 1 (26:19):
Now where's the data coming from?
It's coming from real estateagents listings who upload them
there.
Yeah, it's embedded in all ofthe agreements that when you
upload a property on thatwebsite, that we get to use your
information.
So it's becoming anall-encompassing octopus with
its tentacles wrapped aroundeverything to do with property.
Speaker 3 (26:40):
You're absolutely right yeah, all right, good
discussion, pete.
As we move toward the close fortonight's episode, then I would
just love to catch up on theweek that's been in real estate
and get a bit of a market wrap.
If you can run us throughwhat's been happening in
auctions across sydney over thelast seven days and are we
seeing any improvement on on thehorizon?
Speaker 1 (26:59):
yeah, well, look, uh.
It must be noted that this isthe first uh week's results
after the may rate cut kieranand uh.
Only for the third or fourthtime since last august has the
weekly auction clearance ratecracked 50, must be said for
those that might be listeningfor the first time.
And you said our podcastnumbers have been going up they
(27:20):
certainly have that's great.
So anyone who's listening, forthe first time, we get our
auction data numbers from sqmresearch and we only take their
results on a tuesday afternoon,because on a saturday evening
when you hear that the auctionclearance rate was 72 percent
through the media, for example,that's 72 percent of the known
(27:40):
results yep where?
Um, when we say the auctionclearance rate in in in sydney
has, uh, cracked 50 last week,and that last week, and that's
calibrated on the Tuesday afterthe Saturday and essentially
100% of the results are factoredinto that.
But nevertheless the auctionclearance rate has been hovering
(28:02):
in the mid to high 40s for thelast what's that?
Eight, nine months.
And for the third or fourthtime since then it cracked 50%
on the back of the rate cut.
So you've got to call that agood result.
And can I say that that was onpretty decent volumes too.
It wasn't a low number.
There were a thousandproperties, 1,061 properties
(28:22):
scheduled for auction for theweek, 281 sold under the hammer,
252 sold prior and 51 soldafterwards.
So yeah, decent result.
451 advertised forre-advertised for private treaty
.
Speaker 3 (28:39):
Yeah, that is a big result.
Actually I was going to ask howmany auctions there were this
week because I know last week Ithink was the first time in a
while we'd been sub 800 and youknow this week to be over 1,000,
we're looking know about a 40,40, 45 increase in auction
numbers, which I mean that thatis an indication that there's a
bit, obviously there's moreactivity.
The numbers don't lie uh, butthat that increase of 40 on uh,
(29:01):
when coupled with a risingclearance rate, is a bit of a
good sign, I think.
In my, in my view anyway, it'sa sign that things are improving
and stabilising a little.
Speaker 1 (29:09):
Oh, indeed, look.
The other noticeable thing onthe weekend, kieran, was
inspection numbers were up, butthey were up sharply on
lower-priced properties, andwhen I say lower-priced
properties, properties thatprobably sit below the median
Sydney price of $1.45 millionYep, so anything below $1.45
million.
We noticed really, reallystrong inspection numbers on the
(29:34):
weekend, when we're obviouslywhat are we today, wednesday
evening?
What I would say about theearly start few days of this
week is there was actually thena higher conversion rate of
buyers that looked at propertieslast Saturday who were prepared
to make offers on the Mondayand the Tuesday.
Speaker 3 (29:52):
So that's you know people coming with intent and
confidence on the weekend andthen acting All year we've been
seeing decent inspection numbers.
Speaker 1 (29:59):
At most listings get to Monday, tuesday and you're
really trying to pick the eyesout of it about who was just
walking through and who actuallywants to come in off the bench
and actually, you know, make anoffer and have a play at the
property.
And that's where you disconnectin your campaigns is that
you're communicating these verystrong inspection numbers to
your client.
It's like, well, where's theoffers?
(30:20):
It's like there's hesitancythere from the buyers to come
into the arena, where we've seena much in the last few days.
We've seen a much in the lastfew days.
We've seen a much higherpreparedness from buyers to
follow through on theirinspection and their second
inspection and actually make anoffer and enter into a
negotiation with the vendor.
Speaker 3 (30:40):
Yeah, it's interesting to see.
I know I speculated last weekand I'd asked you directly
whether you thought the interestrate announcement alone would
have any real impact.
And it's only been one week sowe can't make too many
assumptions just yet, butcertainly promising start off
the back of that and I hope youknow, if we continue throughout
the next couple of months andthere is positive activity or
negative in the true in thesense of the rates themselves,
(31:01):
but positive in terms ofsentiment that we will see a
continued, you know, appetitefor transacting in property
across Sydneydney, which is isalways good for the economy and
we saw a similar bounce infebruary after that rate cut.
Speaker 1 (31:16):
But then that was sort of, you know, pulled up
very, very sharply and quicklyon the back of trump's tariffs.
That came through in the march.
Yeah, and that quickly.
You know it caused that.
You know mini meltdown in theshare market.
Um, that quickly took thesentiment away.
So we don't know how causedthat you know mini meltdown in
the share market that quicklytook the sentiment away.
So we don't know how long thatsentiment would have lasted if
it wasn't for for trump'stariffs and everything that went
(31:38):
with it in march.
It must be said today that theinflation number that came out
today was a bit touch and go.
Was it?
The headline inflation held at2.4, but the underlying
inflation crept up from 2.7 to2.8.
It must also be noted that theReserve Bank of New Zealand cut
rates again today and there'ssort of really interesting stuff
(32:02):
going on because if you look atwhat's happening in America,
inflation pressures are reallystill evident there and across
the ditch here in new zealandthey can't cut rates fast enough
yeah after they cut rates today, which I think might be the
fifth or sixth time.
Yeah, they flagged more ratecuts.
Yeah, and here we are.
(32:23):
In australia, we cut ratestuesday week ago and then we get
an inflation number today whichprobably wasn't as good as
everyone would like it to be.
Won't cause the RBA to changecourse, but yeah, seeing the
underlying inflation creep upwas not what anybody wanted.
Speaker 3 (32:43):
No, it's certainly going to be an interesting
couple of months ahead.
We've got some tariff pausesand we've got, you know, trump
just kind of consolidating hisyou know his homeland activity
at the moment.
So I think you know, whathappens over the next three to
four months will certainly beinteresting for the market, but
for financial markets overallthe one, the one that I don't
like that's going on is, I thinkthe ukraine russia war is going
(33:07):
somewhere really bad yeah.
Speaker 1 (33:09):
I'm surprised markets are as calm as they are.
Europe are dialing it upthrough Ukraine.
They're given Ukrainepermission to fire long-range
missiles made or gifted to themby the UK and Germany into
Russia.
Yep, and we've seen that Trumpthought he had Putin where he
wanted him and he's got himanything but that's oh geez.
Speaker 3 (33:32):
Is there an escalation point coming?
Speaker 1 (33:34):
Oh, I hope that can be put back in the bottle,
because that is deterioratingand who knows where that one
goes.
Speaker 3 (33:42):
Yeah, yeah, and unfortunately I don't think
Trump's got the wherewithal todo much about it.
Mate, look really great chattonight, peter, some, as always,
important topics and, as Imentioned, for our listeners,
I'll certainly go back and findour last episode addressing the
REA website listing debacle.
But, peter, thank you for yourinsights into not only this
(34:02):
particular case, but you'veworked with REA for such a long
time.
Having someone with yourexperience talk about what has
changed is really goodinformation for us to kind of
get out for everyone.
Speaker 1 (34:14):
Thanks, Kieran, it was great great chat.
Speaker 3 (34:15):
Yeah, thank you, and thanks to everyone for listening
to Current Market Insights.
We look forward to speakingwith you next time.
Speaker 2 (34:21):
Thanks for joining us on the Current Market Insights
podcast brought to you by HarrisPartners Real Estate, the
podcast providing real estateinsights you won't find anywhere
else.
All down, all silent, going, going, going, go on son
Congratulations.
Speaker 2 (00:07):
Welcome to the Current Market Insights podcast
brought to you by HarrisPartners Real Estate.
Each episode we chat with realestate author and industry
leader, peter O'Malley, todiscuss the current property
market conditions and provideinsights to assist you on your
property journey.
Speaker 3 (00:29):
Hello and welcome to another edition of Current
Market Insights.
I'm your host, kieran O'Brien,and with me, as always, is Mr
Peter O'Malley.
Peter, hello, kieran O'Brien,great to see you.
Peter O'Malley, always great tosee you.
I would love to kick offtonight's episode by talking
about a friend of yours, afriend of mine.
That's realestatecomau, betterknown as the REA group on the
(00:53):
ASX and REA, much like Domainfor those listening who aren't
necessarily aware one of themajor players, if not the major
player, in the Australianproperty landscape in terms of
listings and the website thatshowcases all the properties
that are for sale.
There has been an article comeout this week talking about REA
(01:16):
and how, in fact, they're nowentangled with the ACCC, the
consumer watchdog, around someunjust or potentially unjust
practices and particularly pricegouging.
I would love to start tonight'sdiscussion firstly, peter, by,
I guess, getting your thoughtsand insight into this story a
(01:38):
little bit about what actuallyis the kind of allegation here.
And then, what are yourthoughts, particularly given
that you have been in theindustry so long that you would
have seen the evolution of REA,you would have seen the
evolution of allegation here.
And then, what are yourthoughts, particularly given
that you have been in theindustry so long that you would
have seen the evolution of REA.
You would have seen theevolution of the landscape.
How does the kind of articleand what it talks about line up
with your experience andunderstanding of the space?
Speaker 1 (01:57):
Yeah, thanks, kieran.
Well, look you know.
Quoting the media AustralianFinancial Review, they wrote
yesterday Australia'scompetition watchdog is in the
early stages of a probe into theREA group, looking at whether
the News Corp-controlled realestate listings giant has been
misusing its market dominance tohike rates unreasonably.
(02:23):
The Australian Competition andConsumer Commission has been
quietly meeting with real estateagents and industry bodies over
the past few weeks askingwhether they have feedback or
issues with the $34 billion ASXlisted company.
So a bit of a quick historylesson.
(02:43):
In about 2002, kieranrealestatecom was going broke,
running at 40 cents a share.
Fast forward 21 years later andtheir share price is over $250
a share.
So from 40 cents to $250 ashare, it's actually 242.18.
(03:05):
Yeah.
Speaker 3 (03:06):
It dropped 3.5% after the probe was announced.
Sorry, yes, it's a bit of acollapse.
Speaker 1 (03:10):
So, yes, when I looked at the share price last,
that was around the time of theannouncement and that hadn't
sort of leaked through.
So yeah, it was sitting above$250 a share.
It was sitting above $250 ashare.
So $34 billion behemoth thatstarted in a garage in Melbourne
(03:30):
and that has come from realestate agents having the price
jacked up on them annually,without fail, essentially for
over 20 years.
Without fail, essentially forover 20 years.
The only times that therealestatecom that I can
remember did not hit the realestate industry with a savage
(03:52):
annual price increase, infairness to them, was during the
2008 global financial crisisand during COVID.
Speaker 3 (04:01):
Oh, they're very kind .
That is kind Well look fromrealestatecom's perspective.
Speaker 1 (04:09):
if you increase prices and the customers pay it,
that's fair terms of business,Because confirmation bias right.
Yeah, and the reason that realestate agents have just
continued to pay these priceincreases was a couple of
reasons.
The first is the legacy ofprint.
(04:30):
Real estate agents were used tohaving vendors fund the
campaign under a vendor paidadvertising model back in the
days of newspapers, and at thattime they were asking vendors to
fund a campaign.
This is back in 2000, 2001.
Fund a a newspaper campaign,whether it be the local inner
(04:52):
west coria, wentworth, coria orthe saturday sydney morning
herald, to the tune of anywherebetween eight and thirty
thousand dollars yeah when Ifirst started in real estate in
2000 as a 23-year-old in saleshere in Balmain, I would
regularly meet professionalsthat had spent $30,000 on an
(05:15):
advertising campaign for theirauction failed, not got a bid,
and said, well, that's just badluck, that's how it goes some
days, that's madness, madnessand I was just gobsmacked that
at that point that that peoplehad that sort of money to burn
and then the internet reallybecame dominant.
it clearly existed in 2002, butpeople worked out by 2005, 2006,
(05:38):
that there was absolutely noneed to be advertising in
newspapers anymore and, andslowly but surely, you know the
big broadsheet Sydney MorningHerald shrunk and you know your
domain lift-out, slowlydisappeared and became down to
nothing.
And the Wentworth Courier inthe eastern suburbs went from
500 pages to I don't even knowif they print that thing anymore
(06:00):
.
Speaker 3 (06:00):
I've seen it on doorsteps in Paddington.
It definitely does.
I don't know how often, though.
Speaker 1 (06:04):
Yeah, but all of these two media companies and
people that produce thesepublications was called the
rivers of gold.
Yeah, and then the internet tookit all away and slowly but
surely over the last 20 years,companies such as news limited,
who own the the controllingstake in realestatecom, and
(06:25):
Fairfax, who own Domain, andothers, have sought to transfer
the revenue that was lost fromnewspaper advertising back
across to internet sales, andthey've achieved that.
So that is why realestatecomhave got away with putting such
savage price increases annually,year on year, on the real
(06:48):
estate industry because the realestate industry were
conditioned for it.
It's in their DNA and they'vegot a mentality.
98% of the industry has amentality.
I don't really care whatrealestatecom charges anyway,
because the vendor pays it.
Speaker 2 (07:02):
Yeah.
Speaker 1 (07:04):
And that may be the tipping point where the
regulator has now stepped in,because realestatecom has become
so powerful that you can'tplausibly market a home anywhere
in australia without being onrealestatecom.
So whether it's the agentselling the advertising to the
vendor or the vendor insistingon it through realestatecom, you
(07:25):
have to be there and the costsare extortionate.
So an internet ad in Australiais probably over double, if not
triple, what a real estateinternet ad costs anywhere else
in the world.
Speaker 2 (07:37):
Yeah.
Speaker 1 (07:38):
And people just line up to pay it blindly.
Speaker 3 (07:42):
I feel like that's a common thread perhaps just in
Australian real estate ingeneral.
Everyone just kind of acceptsso much about, you know, the
real estate market broadly.
It's overpriced, it's this,it's whatever.
You know all those kind ofthings that go around.
But you know Australians justgo.
Oh well, that's the way it is.
You know we live in a veryexpensive country and you know
the economy's propped up on realestate and you know the status
(08:04):
quo is just kind of maintained.
We will run through, becauseI've looked into the numbers for
a couple of listings and ads tojust get a sense of what kind
of value we're talking abouthere.
The article itself talks abouthow they talk with Tim McKibben
who is the CEO of the RealEstate Institute in New South
(08:25):
Wales, and he talks about howyou know you can't list for any
less than sort of $5,000 onrealestatecomau now as a general
kind of sense.
And they talk about in thearticle that in 2009,.
So only you know whatever thatis, 16 years ago it was $75 to
put a listing on reacom, right,so $75, everyone would have
(08:49):
jumped aboard.
As you say, you know print'sphasing out, internet's taking
over, so there's this masstransition and it seems so
appealing.
You know, it's cost effective,it's got some appeal, it's easy,
it's portable, it's fast, etcetera, et cetera.
Speaker 1 (09:01):
If you can believe it .
On that point, as late as 2008,we were having to convince
certain vendors no, you don'tneed to spend $1,000 on a Herald
ad for Saturday morning.
Speaker 3 (09:14):
I'm not surprised, honestly.
Speaker 1 (09:17):
As you just say there , the $75 realestatecom ad.
It was a bit more than that.
He's got extremities there inhis two examples five thousand
dollars to list and seventy fivedollars back, way back when it
was never that cheap and it'snot quite that expensive now,
but but nevertheless.
Um being on the internet forthe entirety of the campaign in
(09:39):
2008 was a fraction of athousand dollar,000 ad in the
Herald, but we still had toplead with people not to waste
their $1,000.
And in the end it was like ifyou want to spend $1,000, spend
$1,000.
And I'd ring them up on Saturdayafternoon.
I'd say look, I hate to saythis, we did not get one inquiry
or one person mention your adand I did that not to rub salt
(10:02):
into the wounds, but I didn'twant them ringing me the
following saturday saying let'shave another go.
Yeah, because the, thepurchasing market had clearly
migrated from from the saturdaymorning herald or the, you know
the in the inner west here, theinner west courier, to being
completely online.
They started domain wasdominant early um and we're
(10:23):
running at about 50 50 nowbetween realestatecom and Domain
in the inner west.
The further you go into thesuburbs and when you go into
Queensland.
Realestatecom is all dominant.
Speaker 3 (10:35):
Yeah, look, I'm glad you raised that point because I
actually wanted to sort ofswitch over to that.
I seem to recall years ago Igrew up in, I grew up in eastern
suburbs and I seem to recallthat if you were doing anything
in property uh, you know, I wasin randwick you had to go
through domain.
That was kind of the.
The thing it was, I think,always kind of painted in my
(10:56):
memory anyway, is, this was themore premium prestige kind of
publication and you know, ifyou're in domain, that was a
house that would sell well andpeople, the right people, would
pay attention and as you say nowin the inner west it's maybe 50
, 50.
Maybe that's transitioning aswell.
The article here says that uh,domains market cap is now only
(11:17):
one-tenth of reas.
Now obviously that's in valueas well as we.
We could assume, uh, or youcould maybe extrapolate that
that's also talking aboutexposure, but I don't think it's
quite that clear cut.
Speaker 1 (11:29):
Well, where it comes from is.
The Americans have just boughtDomain for $3 billion.
Yes, I saw that and asdiscussed, based on the day this
article was written, when therealestatecom share price was
$258, I think it was that valuedthe company at $34 billion, so
yeah.
Speaker 3 (11:46):
Yeah, exactly one-tenth.
I find it interesting and Ithink it's important to note
that, if you know, rea, whilstundertaking these predatory
practices, are doing so whilealso dominating the space and
potentially convincing consumersthat they don't have an
alternative.
You know, know, if you want tosell your property as as a
(12:08):
vendor, then what do you do ifyou don't want to pay those
prices?
Speaker 1 (12:10):
look, I didn't want to interrupt you before, but
when you said as australians, wetend to just accept these
things at face value.
And the point that I wanted tomake around that one, kieran,
which is in sync with whatyou've just said there is, is
that Australians don't quiteaccept it at face value.
But real estate salespeople arehighly effective and highly
(12:31):
convincing and when youinterview four agents over a
month before deciding, one ofthem gets the listing and all
four highly effectivesalespeople tell you that you've
got to be on realestatecom andthe rates are fair, you're
likely going to go with one ofthem.
Speaker 2 (12:47):
Yeah.
Speaker 1 (12:48):
Now, if people want to know what solutions or
alternatives the industry'scoming up with to try and get
their head out of the noose thatthey've put themselves, in well
, that solution, which mostpeople would readily recognise,
is off-market listings.
I said inside real estate thatoff-market listings is not an
effective sales strategy.
(13:08):
It's brought about by the realestate industry trying to avoid
heavy website portal costs,particularly when they've got a
fair idea of who the likelybuyers are going to be anyway.
So, as a real estate agent,there's a.
there's a massive moral questiongoing into different home
(13:28):
sellers houses saying I need totake five thousand dollars off
you to find buyers for yourhouse, and then all of the
buyers that walk through thehouse you know anyway yeah and
are on your database, and youcan let them know about the same
house by sending an email whichcosts nothing, but instead
you're sitting in a vendor'slounge room asking them for
$5,000 non-refundable to sendthe same email through
(13:49):
realestatecom.
Yeah, or domain.
Speaker 3 (13:53):
Of course, or both right, because more often than
not, just because REA isexpensive doesn't mean domain is
cheap.
On the flip side, they're bothexpensive, rea just seem to be a
little bit more aggressive.
Demand is cheap.
On the flip side, they're bothexpensive, rea just seemed to be
a little bit more aggressive.
To give some, I guess, somecontext to our listeners, as I
said, I went through and had abit of a look at some of the
costs to list and advertise someof these properties and one of
(14:15):
the things that has becomeapparent in the article, but
also just in our experience, isthat the listing cost and one of
the reasons they're beinginvestigated being investigated
in fact is that the price isdifferent depending where you
list.
So if they deem that yourproperty is in a premium
location, you get a premiumprice tag attached, which you
know doesn't surprise anyone.
But you know, I'm thankful thatthe watchdog is actually
(14:37):
investigating this and trying todo something about it.
But to put some context to that, I I just looked up very
briefly.
It's a list of property inMount Druitt, so I just picked
something out west You'relooking at.
You know, kind of baseline $300to get it online and then
another $1,700 to just kind ofget it to show for people.
Then if you want to do a properad which is the vast majority
(14:59):
of what you know agents aretrying to sell to their clients
you're looking at $5,500thousand roughly, which is a lot
of money in mount.
Drew it in mount, drew it right.
Come to balmain, the flip sideof that.
You know obviously where we'rerecording this.
You, you still have the, thesame kind of base 300 but you're
suddenly looking at 2300 justto get it online and visible and
(15:22):
then to get it to the same sortof advertising space as the
other one.
It's over 7 000.
So we're talking the same sizead, the same, you know, content,
the same pictures, whatever itmight be, nothing extra added.
But there's, you know, abouteighteen hundred dollars price
difference between the two,which makes sense to us because
we've been in the industry for awhile.
(15:43):
But it's absolutely absurd whenyou think about the reality of
that because, as you say,everyone's on real estate or
domain, anyway People areaccessing this.
Is it really necessary to spendover $7,000?
Speaker 1 (15:55):
just to get your pictures in front of someone.
What you've outlined there iswhy they're being investigated
for price gouging.
We mustn't say they have pricegouged or anything like that.
They're being investigated forit.
Speaker 3 (16:06):
We can't dispute the discrepancies, though, that the
prices are different, but wecan't prejudge them either.
No, no, but you can't dispute,they're different.
Speaker 1 (16:12):
Yeah, look, they're coming for you, not me, that's
fine, because you've said allthe nasty things about them.
But look, you know, we could alldraw our own conclusions from
what you've just read out thereas to what's happening and it's
a real case, generally speaking,of if I can charge you more and
(16:34):
you can afford more, I'm goingto hit you for more.
And because we are heading froma duopoly between domain and
realestatecom and, unfortunatelyfor all of us in the real
estate industry, we're quicklyheading toward a monopoly, where
it you know, realestatecom areessentially scorched earth.
They've just blown all of theircompetitors off the park.
(16:56):
Where does that sort of pricingbehavior stop?
And I think that is why theregulator is stepping in now,
because if you want any evidence, if you want any evidence of
how powerful realestatecom isbecoming and what a threat they
are becoming to the realtor inthe process, the adjunct of this
story is that the Ray Whitegroup and John McGrath
(17:21):
investigated buying domain orgoing into business with domain
to help give them teeth in theirbattle against realestatecom.
Those discussions apparently noparty's confirmed it, but it's
in the media.
(17:41):
This All these discussions werestarting before the American
company is it Constar, costar?
Costar came in and took outdomain.
Yeah it's for a bargain pricerelative to their exposure
relative to the share price ofrealestatecom.
Speaker 3 (17:59):
Yeah, it's an interesting acquisition?
I I certainly wonder.
Because CoStar?
I had a quick read about themas a company.
I'd never heard of them, to behonest, but I'd certainly heard
of some of their brands.
So you know, costar owns a lotof the very big portals in the
United States, owns On theMarket in the UK a very, very
large portal.
They own Matterport, which isone of the imaging kind of
(18:21):
companies used to do themajority of real estate, which
is one of the imaging kind ofcompanies used to do the
majority of real estate, likethey're a big real estate prop
tech group, uh.
So it'd be interesting to seewhat they do with domain and
whether or not they find a wayto revitalize.
I guess the final point I'llmake on this is, as you know,
someone who looked after thereal estate account for your
business for a few years.
One thing that is 100 true, uh,is that they will increase
(18:43):
prices year on year by 10% to12%, without any question.
And the sad reality is, whenthey're doing it to you, they're
doing it to other agencies andother individual agents out
there and those costs aregetting passed on and they know,
as you say, while they've gotthis potential monopoly.
They will just continue totighten the screws and tighten
(19:05):
the screws, and tighten thescrews and unfortunately, I
don't think agents have muchchoice but to just pay and keep
going.
Speaker 1 (19:11):
The only choice available to agents is what is
happening here.
So what I'm detecting andyou'll never really know but the
real estate industry whilstthey might be all shaking hands
with their realestatecom accountmanager, there's a, there's a,
there's a underground swell herefrom the real estate industry
(19:33):
that are feeding the, thecomplaints and the information
to the regulator as to what'shappening.
This is, this is headingtowards battle of survival for
the industry, because we areheading where you think about
how big the real estate industryin Australia is, it's nearly
all working for Rupert Murdoch.
(19:53):
We're nearly at that point.
I'll tell you now.
We're on track to go that way,on the trajectory we're on.
Speaker 3 (20:00):
Oh, absolutely.
I guess I've got a question foryou and this is a little bit,
uh, hypothetical but do youthink that the rea's ultimate
goal is to continue to work inthe space to eventually just
remove the agents altogether andeffectively price the middleman
out and create a platformthat's, you know, utilizes ai
tech to be self-sufficientwithout the agent needing?
Speaker 1 (20:23):
to be involved.
Look who knows where it's allgoing with AI.
So I don't know where it'sgoing with AI.
Ai could be realestatecom'sbest friend and final frontier,
where that's the final plankthey need in place to wipe the
agent out of the process.
Or AI could be the exactopposite, where that's the reset
(20:49):
that the real estate industryis hoping and praying comes
along again because real estateagents using the VPA model,
which is the media company,charge us a lot of money.
We go out and sell it to theconsumer.
The consumer pays.
We don't feel it because wetake five thousand dollars off
kieran and give it to fairfax orrealestatecom or domain or
(21:12):
whoever it might be, and it'snot really our cost, it's the
consumer's cost.
And then the internet wiped allthat away yeah and real estate
agents were off the hook.
So what did they do?
Speaker 3 (21:25):
Started all over again.
Speaker 1 (21:26):
Just jumped back on the hook.
Yeah, so I always say about thereal estate industry I'm sorry
to my industry colleagues forthis, but the real estate
industry is full of highlyintelligent people, extremely
good operators.
Individually and as an industry, it's completely and utterly
stupid.
Speaker 2 (21:42):
Yeah.
Speaker 1 (21:43):
So you don't see this in America, rupert Murdoch
having this business inAustralia, and and and Lachlan.
They've tried to replicate thismodel in America, but the real
estate industry has held controlof itself.
So in in America they're verycollegial between themselves,
the major real estate brands,and they don't let themselves
(22:05):
get on the hook like theaustralian real estate industry
is.
Speaker 3 (22:09):
So they've never been subjected to this sort of
pricing that you've justoutlined there yeah, yeah, and I
think too in america it's muchmore collegial too between
agents individually, right, sothey're kind of using that's
right a buyer, seller, agentmodel.
One controls some listings, onecontrols others.
Like it's not a yeah, you don'tjust go to the marketplace and
say I want to buy that from theagent who's selling you.
(22:30):
You engage an agent to work foryou and that becomes a process,
right?
Yeah, look, it's interesting tosee what will happen.
I I think this is overdue and Iwill for our listeners.
I will dig back, because youand I spoke about rea on a
previous episode of the podcastand we did talk about their
dominance and how people werelooking to shift away and and
the one, the one advertisermodel.
(22:51):
We did discuss that previously.
So, if I do, that's right.
Yes, I'll find that episode andI'll link it.
So there is a bit of contextthere.
You know, we can always say wespoke about this a long time ago
, which we did uh.
But I'll be interested to seebecause I think the industry
needs this uh to reset, becausethe way it's storming forward at
the moment it really is, youknow, it's ignoring CPI, it's
ignoring cost of living.
(23:11):
This is just charging forwardwithout any regard for, you know
, what the end consumer has topay.
Speaker 1 (23:16):
Oh, that's right.
Well, it just is.
It's unjustifiable, that's theword.
Speaker 3 (23:21):
Nothing's changed on their platform.
You're just paying to continue,as is right.
Speaker 1 (23:25):
Look, I'd say it's modestly improved and there's
features there.
I wouldn't say that when you'reon the platform you call it a
bad platform.
You can see the user experienceis there, but have costs
increased in line with therevenue growth of experience?
No, costs are well behindwhat's happened there.
But basically the real estateindustry going back to the point
(23:49):
we were discussing cannot relyon AI giving it a second chance
at a reset, like the internetdid in the early 2000s.
So what is happening before?
Realestatecom are a completemonopoly, uncontrollable.
The real estate industry hasgone to the regulator and said
this is now on an untenable pathand the reason I point that out
(24:11):
is that when you're sellingyour home and you interview four
agents, they're allenthusiastically selling the
value and the virtues ofrealestatecom because they have
to yeah but behind the scenes.
The real estate industry isscreaming about this and, as a
(24:35):
consumer, you need to separatethe pitch that the agent's
giving you and they want yourlisting and the reality of
what's going on behind thescenes.
Why don't realestatecomstrongly encourage private
vendors?
Because that would very quicklyeducate the market how much
smoke and mirrors there are inall of these costs.
Speaker 2 (24:52):
Yeah.
Speaker 1 (24:52):
When we go back to your Wentworth Courier landing
on the doorstep in Ramwick.
I accept there was a printerinvolved.
There was a delivery involved.
Unfortunately, some weeks itwould get washed out if it
wasn't put in the.
You remember the plastic?
Speaker 2 (25:05):
sleeves that would come in during winter.
Speaker 1 (25:07):
Still is.
So you could see hard-coredcosts in that, which made it
slightly justified.
But, as we've just discussedhere, the cost structure, or the
increased costs that thesewebsites would have experienced
over the last 20 years, is well,well below the increase that
they've extracted from the realestate industry and vendors who
(25:30):
are leasing and selling theirproperties.
Speaker 3 (25:33):
Yeah, look, as a final point, I think my
observation of them as a groupis that the website is making
money for their broaderendeavors.
Right, it's a prop tech company.
Now.
They're not just a listingplatform.
They're buying up differentcompanies who do all kinds of
things in the space.
You know, they do all marketresearch, they go, you know
whatever it is.
So I feel like those costsactually are just helping to
(25:54):
funnel their r&d arms andwhatever else they're doing
behind the scenes and look, timewill tell as to whether or not
that is beneficial to theindustry or not it's becoming an
octopus.
Speaker 1 (26:03):
There's no doubt you know absolutely uh, two years
ago they had a 20-year deal withone of the data house providers
and that was pushed to the sideand they opened up their own
data arm.
Speaker 2 (26:18):
Yeah.
Speaker 1 (26:19):
Now where's the data coming from?
It's coming from real estateagents listings who upload them
there.
Yeah, it's embedded in all ofthe agreements that when you
upload a property on thatwebsite, that we get to use your
information.
So it's becoming anall-encompassing octopus with
its tentacles wrapped aroundeverything to do with property.
Speaker 3 (26:40):
You're absolutely right yeah, all right, good
discussion, pete.
As we move toward the close fortonight's episode, then I would
just love to catch up on theweek that's been in real estate
and get a bit of a market wrap.
If you can run us throughwhat's been happening in
auctions across sydney over thelast seven days and are we
seeing any improvement on on thehorizon?
Speaker 1 (26:59):
yeah, well, look, uh.
It must be noted that this isthe first uh week's results
after the may rate cut kieranand uh.
Only for the third or fourthtime since last august has the
weekly auction clearance ratecracked 50, must be said for
those that might be listeningfor the first time.
And you said our podcastnumbers have been going up they
(27:20):
certainly have that's great.
So anyone who's listening, forthe first time, we get our
auction data numbers from sqmresearch and we only take their
results on a tuesday afternoon,because on a saturday evening
when you hear that the auctionclearance rate was 72 percent
through the media, for example,that's 72 percent of the known
(27:40):
results yep where?
Um, when we say the auctionclearance rate in in in sydney
has, uh, cracked 50 last week,and that last week, and that's
calibrated on the Tuesday afterthe Saturday and essentially
100% of the results are factoredinto that.
But nevertheless the auctionclearance rate has been hovering
(28:02):
in the mid to high 40s for thelast what's that?
Eight, nine months.
And for the third or fourthtime since then it cracked 50%
on the back of the rate cut.
So you've got to call that agood result.
And can I say that that was onpretty decent volumes too.
It wasn't a low number.
There were a thousandproperties, 1,061 properties
(28:22):
scheduled for auction for theweek, 281 sold under the hammer,
252 sold prior and 51 soldafterwards.
So yeah, decent result.
451 advertised forre-advertised for private treaty
.
Speaker 3 (28:39):
Yeah, that is a big result.
Actually I was going to ask howmany auctions there were this
week because I know last week Ithink was the first time in a
while we'd been sub 800 and youknow this week to be over 1,000,
we're looking know about a 40,40, 45 increase in auction
numbers, which I mean that thatis an indication that there's a
bit, obviously there's moreactivity.
The numbers don't lie uh, butthat that increase of 40 on uh,
(29:01):
when coupled with a risingclearance rate, is a bit of a
good sign, I think.
In my, in my view anyway, it'sa sign that things are improving
and stabilising a little.
Speaker 1 (29:09):
Oh, indeed, look.
The other noticeable thing onthe weekend, kieran, was
inspection numbers were up, butthey were up sharply on
lower-priced properties, andwhen I say lower-priced
properties, properties thatprobably sit below the median
Sydney price of $1.45 millionYep, so anything below $1.45
million.
We noticed really, reallystrong inspection numbers on the
(29:34):
weekend, when we're obviouslywhat are we today, wednesday
evening?
What I would say about theearly start few days of this
week is there was actually thena higher conversion rate of
buyers that looked at propertieslast Saturday who were prepared
to make offers on the Mondayand the Tuesday.
Speaker 3 (29:52):
So that's you know people coming with intent and
confidence on the weekend andthen acting All year we've been
seeing decent inspection numbers.
Speaker 1 (29:59):
At most listings get to Monday, tuesday and you're
really trying to pick the eyesout of it about who was just
walking through and who actuallywants to come in off the bench
and actually, you know, make anoffer and have a play at the
property.
And that's where you disconnectin your campaigns is that
you're communicating these verystrong inspection numbers to
your client.
It's like, well, where's theoffers?
(30:20):
It's like there's hesitancythere from the buyers to come
into the arena, where we've seena much in the last few days.
We've seen a much in the lastfew days.
We've seen a much higherpreparedness from buyers to
follow through on theirinspection and their second
inspection and actually make anoffer and enter into a
negotiation with the vendor.
Speaker 3 (30:40):
Yeah, it's interesting to see.
I know I speculated last weekand I'd asked you directly
whether you thought the interestrate announcement alone would
have any real impact.
And it's only been one week sowe can't make too many
assumptions just yet, butcertainly promising start off
the back of that and I hope youknow, if we continue throughout
the next couple of months andthere is positive activity or
negative in the true in thesense of the rates themselves,
(31:01):
but positive in terms ofsentiment that we will see a
continued, you know, appetitefor transacting in property
across Sydneydney, which is isalways good for the economy and
we saw a similar bounce infebruary after that rate cut.
Speaker 1 (31:16):
But then that was sort of, you know, pulled up
very, very sharply and quicklyon the back of trump's tariffs.
That came through in the march.
Yeah, and that quickly.
You know it caused that.
You know mini meltdown in theshare market.
Um, that quickly took thesentiment away.
So we don't know how causedthat you know mini meltdown in
the share market that quicklytook the sentiment away.
So we don't know how long thatsentiment would have lasted if
it wasn't for for trump'stariffs and everything that went
(31:38):
with it in march.
It must be said today that theinflation number that came out
today was a bit touch and go.
Was it?
The headline inflation held at2.4, but the underlying
inflation crept up from 2.7 to2.8.
It must also be noted that theReserve Bank of New Zealand cut
rates again today and there'ssort of really interesting stuff
(32:02):
going on because if you look atwhat's happening in America,
inflation pressures are reallystill evident there and across
the ditch here in new zealandthey can't cut rates fast enough
yeah after they cut rates today, which I think might be the
fifth or sixth time.
Yeah, they flagged more ratecuts.
Yeah, and here we are.
(32:23):
In australia, we cut ratestuesday week ago and then we get
an inflation number today whichprobably wasn't as good as
everyone would like it to be.
Won't cause the RBA to changecourse, but yeah, seeing the
underlying inflation creep upwas not what anybody wanted.
Speaker 3 (32:43):
No, it's certainly going to be an interesting
couple of months ahead.
We've got some tariff pausesand we've got, you know, trump
just kind of consolidating hisyou know his homeland activity
at the moment.
So I think you know, whathappens over the next three to
four months will certainly beinteresting for the market, but
for financial markets overallthe one, the one that I don't
like that's going on is, I thinkthe ukraine russia war is going
(33:07):
somewhere really bad yeah.
Speaker 1 (33:09):
I'm surprised markets are as calm as they are.
Europe are dialing it upthrough Ukraine.
They're given Ukrainepermission to fire long-range
missiles made or gifted to themby the UK and Germany into
Russia.
Yep, and we've seen that Trumpthought he had Putin where he
wanted him and he's got himanything but that's oh geez.
Speaker 3 (33:32):
Is there an escalation point coming?
Speaker 1 (33:34):
Oh, I hope that can be put back in the bottle,
because that is deterioratingand who knows where that one
goes.
Speaker 3 (33:42):
Yeah, yeah, and unfortunately I don't think
Trump's got the wherewithal todo much about it.
Mate, look really great chattonight, peter, some, as always,
important topics and, as Imentioned, for our listeners,
I'll certainly go back and findour last episode addressing the
REA website listing debacle.
But, peter, thank you for yourinsights into not only this
(34:02):
particular case, but you'veworked with REA for such a long
time.
Having someone with yourexperience talk about what has
changed is really goodinformation for us to kind of
get out for everyone.
Speaker 1 (34:14):
Thanks, Kieran, it was great great chat.
Speaker 3 (34:15):
Yeah, thank you, and thanks to everyone for listening
to Current Market Insights.
We look forward to speakingwith you next time.
Speaker 2 (34:21):
Thanks for joining us on the Current Market Insights
podcast brought to you by HarrisPartners Real Estate, the
podcast providing real estateinsights you won't find anywhere
else.
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