Trade Me Property solidifies status as property marketing powerhouse

Trade Me Property recently published an interesting infographic detailing some key statistics on their website usage by home buyers. I thought the data worthy of highlighting and reviewing.

The figure which, whilst not central to the stats on property is always somewhat staggering is that Trade Me has over 3.2 million accounts and over 730,000 daily visitors across its site. There would be no other media save only for the gorilla-like Facebook that attracts such an audience or holds such an account base of NZ’ers. Certainly no traditional media company comes anywhere close to that which makes it all the more surprising that Fairfax, having shown the smarts to acquire the company then made the decision to divest.

Anyway back to property. Trade Me Property now attracts over 120,000 visitors a day which represents 4 times as many buyers as any other site (clearly referencing the 2nd placed site of realestate.co.nz). This level of daily visitors is staggering for the reality is that if you added together all the active property buyers and sellers in NZ to the total of all the agents, to all of those looking to rent property with all investors and then add commercial property agents and their clients, in total you might get somewhere close to a third of that number. That means that right or wrong the appeal of viewing property is a national pastime. However whilst we often label ourselves as a nation of property fanatics I can tell you that with my experience of similar property portals around the world we are not that different. In fact in Australia the ratio of visitors to population on the leading site realestate.com.au is higher than Trade Me Property attains and in the UK RIghtmove the leader there is the 6th most visited website in the UK across all categories.

Not only does Trade Me achieve this enormous visitor traffic on a daily basis they also manage to engage those visitors for longer than any other property site. This results in the staggering fact that 8 out of 10 of all time spent by people on property website s in NZ is spent viewing property on Trade Me.

Added to these hard statistics sourced from market analysts Nielsen, are some new data from a recent survey the company undertook from a survey of over 600 qualified buyers. The research shows that more than half of all buyers found the property they bought on Trade Me with 63% of buyers rating Trade Me as their #1 place to find property. 

Clearly Trade Me has the lions share of eyeballs and they are leveraging this to seek to deliver every growing financial returns which are so required of a publicly listed company. The question and challenge for the company is more by how much can Trade Me can grow its Property division. That is the challenge for the new leader of that business when they are appointed. 

Related articles on Trade Me and the latest issues around their new pricing model for agents:

Agents to boycott Trade Me - I don't think so

Some further thoughts on the industry reaction to Trade Me Property new pricing

Trade Me makes radical change to real estate agent fees

The global industry of property portals

I have spent the past week running a global conference in the beautiful Spanish city of Barcelona. The conference, part of a regular series of conferences hosted around the world by Property Portal Watch, for which I am CEO; brings together a wide variety of executives of property portals from numerous countries for a 3 day conference to discuss the trends and developments in this fast growing industry.

With over 230 attendees from more than 40 countries the conference provided a unique experience for like-minded executives to network and share insight and experiences around the development and operational performance of property portals. Represented within the attendee list were executives from leading portal operates in developed countries such as Italy, Germany, Spain, France and Ireland as well as those representing more emerging markets from Eastern Europe with attendees from Estonia, Lithuania, Poland, Russia and Romania. As well as European attendees we had attendees from Australasia, India as well as Latin America and Africa.

I thought it would be interesting to share some of the headlines from the conference to provide a sense of this now well established global industry.

Whilst no accurate figures exist ( a task Property Portal Watch is currently undertaking ) there are probably over 2,500 property portals across the world employing well over 20,000 and conservatively with a market cap in excess of $25 billion. The top 3 global leaders (all of which are listed companies - REA Group (which operates the Australian portal Realestate.com.au) RightMove in the UK and Zillow in the US are collectively valued at over $14 billion. This is by no means a start-up industry, this is a significant and well established industry attracting significant investment funding and delivering significant return on investment. Rightmove in the UK delivers a EBIDTA margin of over 70% - that is to say for every dollar of sales revenue they deliver 70 cents of profit (before depreciation and amortisation).

The leading players in these developed markets of Europe and Australia especially are continuing to see growth in sale revenue through greater marketing services of premium advertising that they deliver to their agent customers who more and more ignore the print media and focus exclusively online to deliver marketing profile and buyer leads, something that seems to be a challenge for NZ agents to accept. In many European countries print media for property advertising is virtually non existent, Talking to the leading operator in Poland (far from a developed market) who stated that close to 90% of real estate marketing spend of properties for sale went online.

Whereas the revenue growth of leading operators is slowing as markets reach a degree of saturation from listings fees, those in more emerging markets continue to experience continued doubling of revenues as they spearhead the adoption of online marketing by agents. The focus of these emerging markets seems to be focussed less in Asia these days and more around Africa, the Middle East and Latin America. Africa particularly seems to be a very hot market with new entrants operating in Nigeria, Kenya, Morocco as well as Uganda and Rwanda.

A significant topic of the conference was the role of horizontal vs vertical portals in the property space, this has particular relevance to NZ as a horizontal operator is best defined by Trade Me, having as it does under the one site the categories of general classifieds, motors, jobs as well as property. This contrast with realestate.co.nz which is a specialist vertical. It focuses on just property. Many other countries experience a similar challenging environment whereby these horizontal operators attracts a significant aggregated audience across the various sectors thereby creating massive audience numbers often far ahead of the vertical property operator. There was extensive discussion around the emergence of more of these horizontal players and the consolidation of these operators by companies acquiring such operations through Europe, interestingly despite the global dominance in online classifieds E-Bay does not present itself in any market as a significant player in property marketing.

The global property portal industry is diverse not only in scale and market development but also in ownership for there are many industry owned property portals around the world some like Funda in Holland and Hemnet in Sweden completely dominate their market. The challenge for them and something I can relate to is the political issues of balancing the needs of the industry organisation to service the desire of the industry to ‘protect’ this vital marketing media matched to the desire to continually offer enhanced and innovative user services and tools to ensure continued engagement and loyalty. It seems a shame that so little of that seems to come from realestate.co.nz these days.

Overall the conference was a great success and this being the 9th such conference over the past 5 years has demonstrated the value that can be created by a facilitated collaboration and sharing of idea and experiences by industry professionals prepared to open up and get together.

The next conference our 10th for PPW will be held in New York on the 13th / 14th January - very likely to be a well attended and comprehensive insight into this fast growing industry.

The LVR speed limit - crippling or merely cooling the market

The Real Estate Institute in their monthly report for October stated in headlining their report that "LVR Restrictions Impacting Sales Volumes" - they went on to say "sales volumes eased back in October following the introduction by the Reserve Bank of restrictions on high LVR lending". The actual sales in October were 6,778 which was up 2% on a year ago, that month of October 2012 was up 32% on the prior October of 2011, which itself was up 28% on the prior year being 2010. So in the space of 3 years sales volumes are up 74%, in fact the level of 6,778 is the median for the past 21 years. 

Property sales growth is slowing - looking at the trend of monthly sales as compared to prior year we are coming to the end of a run of 30 straight months of growth in sales year-on-year, by no means the longest run, but a strong recovery from the property crash of 2008 as the chart below shows. Typical towards the end of a long run of growth comes more erratic variance as the growth begins to turn negative as we are seeing in the October figures.

Added to these factual statistics from the Real Estate Institute was the monthly survey of real estate agents published by the BNZ and initiated through the Institute. This survey which I have mentioned before could be a vital sense of a pulse of the property market as the Institute represents almost all licensed agents. Given that it is a shame that from the population of close on 10,000 such low reporting of the monthly survey occurs. This month the survey looked for verbatim responses to the statement "What effects have you noticed from the LVR rules?". There were 247 responses published by the BNZ report. A quick count up had 180 of these comments showing a very pessimistic view on the impact of these LVR changes and the impact on first time buyers and open home attendance as well as performance of auctions. Here is sense of the responses:

 auction rate under the hammer has dropped dramatically

number of first home buyers in the market has decreased markedly

More very frustrated Vendors

Majority of first home buyers dropped from the market

Drastic decrease in competitive bidders/bidding

Massive decrease of first home buyers

Definite drop off in first home and migrant buyers

Huge decrease in people looking at property

A lot of Sale and Purchase agreements are not going unconditional or if they are it is at a cheaper, 
renegotiated price

Massive reduction of attendees at open homes

Overnight no enquiry from first home buyers. they have been scared away

Reading through these and the other verbatim comments reflecting a net 72% negative you would soon become depressed about the future months of property sales with a sense of up to 30% decline as that has been the often quoted component of 1st time buyers. However the reality is there is no accurate source of data that shows what 1st time buyers actually represent of the market so any prediction of effect is largely guess work, and the views of agents from what is a very small sample - just 247 from 10,000 (2.5%) should be taken with a note of caution.

There is though data from the Reserve Bank that reports the weekly levels of Housing loan approvals of both new mortgages and re-mortgages. Such data provides vital opportunity for analysis as I have done in the charts below.

This chart shows in the red line the 4 week moving average of the number of housing loan approvals made by trading banks. The last few weeks of October certainly showed an accelerated decline, however the trend as best seen in the grey line being the 12 week moving average shows that volumes had been declining since a peak in May of this year, however they still remain around 6,000 a week.

The next chart shows the trend of volume comparing the 4 week moving average year-on-year. This chart certainly would seem to show a picture of the announcement of the decision to implement the speed limit of high LVR triggering a slowing in volume of new housing loan approvals, in effect reversing a period of recovery which began in July, although as with the prior chart the longer term trend still shows slowing growth.

We will need to wait until at least the November sales figures and more likely until the new year as well as to study housing loan approvals before the definitive statement can be made as to the true impact on the changes as a consequence on the high LVR restrictions, indications certainly show an impact, though that impact in sales is not huge as yet.