The battle for listings between Trade Me and Realestate.co.nz

by Alistair Helm in


A quiet celebration may well have been heard in the Trade Me office in Wellington earlier this week. Such an event will come as a welcome reprise, for when it comes to the Property division of the company, the last 5 years have not been an easy ride; I should know, as I spent the past 3 years working as part of the team to build out a comprehensive platform of tools for Trade Me members and real estate agents.

The celebration would have been for a milestone in the comparative inventory of properties for sale. As of Monday night the number of active listings of properties for sale (excluding bare land and building sections) advertised on Trade Me totalled 28,883, whilst for their competitor Realestate.co.nz it was 28,876 – a small margin of just 7 listings, but for Trade Me a major milestone. For the first time since late 2013, Trade Me has reasserted its mantle of leadership for the inventory of property for sale.

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The past decade in which digital advertising of property-for-sale has really become established as a critical marketing platform, has seen a somewhat chequered performance by Trade Me; but by no means a smooth road for Realestate.co.nz (I was CEO of Realestate.co.nz from 2006 to 2012).

The initial period up until mid 2010 was the most challenging time for Trade Me. Their initial launch in 2005 was not greeted warmly by the majority of the real estate companies with lacklustre support in the earlier years with the foundational move to get Ray White as an early strategic customer; this lead to key regional operators like Tommy’s and Leaders coming on board, as well as medium sized operators such as Professionals and First National before seeing one-by-one the majors of Bayleys, Barfoot & Thompson and then finally Harcourts bowing to the pressure generated by their agents to list on Trade Me. By 2010 the writing was on the wall that Trade Me was accelerating towards 100% inventory of all property for sale.

Between 2010 and the end of 2013 things could not have looked rosier for Trade Me. That period did see a significant tightening of the overall market, leading to a significant decline in overall listings, however given the fact that Trade Me's business model was a monthly subscription irrespective of listings, the money was rolling in as all offices around the country signed up to Trade Me. For Realestate.co.nz this was not an easy time, as given the unparalleled awareness of the Trade Me brand and its massive audience advantage, fighting for relevance was tough and despite the significantly cheaper subscription offering, offices were wavering on their commitment to this industry-owned site.

All that changed in September 2013 when as anyone with any knowledge of the history of this industry will tell you, Trade Me made a mistake. A mistake that has ended up costing them dearly and creating deep divisions within the industry. It was (if you don’t know) a price change for agents and agencies moving from a subscription to a pay per listing model. The consequence of this mistake was a much publicised boycott by agencies of Trade Me listings which saw a listings' leadership over Realestate.co.nz of 27% in mid 2012 slip to a deficit of 18% by the end of 2014 with overall leadership in inventory conceded in February 2014.

 

Apples with Apples

The figures I have used in this analysis, being the number of listings of property-for-sale, does have one glaring issue which lives under the classic phrase of “comparing apples with apples”. The Trade Me total inventory includes private-for-sale listings and of course Realestate.co.nz being an industry-owned site does not list private sellers . Not wishing to rain on their parade, the sad news is that when an adjustment is made to remove private-for-sale listings from the Trade Me inventory the slim advantage disappears and Realestate.co.nz retains leadership of the market of agent listings of property for sale.

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Thanks to Core Logic I have been able to estimate the extent of private listings from the total Trade Me listings inventory (an estimate based on proportion of private settled sales to total settled sales as a surrogate at least). This revised picture shows that Trade Me still lags Realestate.co.nz for leadership in listings, the margin represents some 2,500 listings with Realestate.co.nz having 9% more agent listings than Trade Me.

 

Regional picture

As ever with real estate there is never a single market, there are multiple markets on a local basis and so it is when it comes to inventory.

Analysing the regional inventory at this time shows that Trade Me can take comfort from the success they have had in the Auckland market, where as of today they hold a leadership in inventory of 3% with 10,277 properties for sale in a market. Adjusting for private-for-sale listings (which are low in this region) means that Trade Me has practically 99% of all the agent listings across Auckland.

In contrast looking to those markets where the 2014 boycott was strongest. Trade Me continues to lag significantly behind, specifically in the Manawatu / Wanganui region as well as the Hawkes Bay. Trade Me in these regions have between 60% and 70% of all agent listings.

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