The UK's challenger property website Zoopla heads for an IPO
The property portal space in the UK keeps getting more interesting as the #2 challenger in the market Zoopla signals it's decision to float as a public company. The changing competitive landscape in the UK portal space as well as the approach to the IPO is interesting and has pointers for the NZ market - here are some of my thoughts
The UK real estate market is in many ways very different to New Zealand. For a start the structure of the industry, offering a different degree of service and a lower commission fee structure of around 1.5%. Equally the process of purchase (certainly in the England) is a lot more tortuous with the system of accepted-offers on property purchases amounting to no more than an intention to buy right up until the settlement date when as a buyer or seller you get to know if the process will all go through.
When it comes to marketing of real estate the landscape is also somewhat different. Firstly the industry has moved almost wholly to online with the dominant player Rightmove growing into a highly successful and valuable company.
Rightmove was founded in 2000 by the top 4 real estate companies as a free to list service, fully industry owned. The site and the business grew in size, relevance and value as firstly subscription fees were introduced in 2002 and then premium advertising products in 2007. In 2006 the founding sahreholders decided to float the company with an IPO which listed the company on the London Stock Exchange in March of that year at a initial price of £3.35 valuing the company at £425 million. The IPO raised £76 million representing 18% of the company with the balance retained by the founding shareholders.
Over the following 8 years the company has grown in scale and financial performance from revenues of £18 million to over £140 million (an increase of 670%) and at the same time the value of the company has grown to over £2,360 million ( an increase of 450%).
At one time around 2009, Rightmove seemed to have the market sewn up as the competitive threat was fragmented with competing sites such as PropertyFinder, PrimeLocation and FindaProperty as well as innovative property information sites like Globrix fighting it out for a weak number 2 position. It was through smart acquisition of these competing sites that Zoopla came striding through the market to become over the space of 8 years a real challenger to Rightmove. From the latest stats as measured by SimilarWeb the traffic to Zoopla is around two thirds of that of Rightmove with an estimated 16.7 million visits per month.
The financial backing for Zoopla came largely from The Daily Mail & General Trust the publisher of the same name which is still the largest shareholder in the company with 52.8% of the shares. Zoopla whilst not attaining anything like the revenue and profit levels of Rightmove (£38m in revenue and £10m in profits) has driven the business to create a very strong number 2 player in the market. Core to this success has been data around sales prices and estimated valuations. In very much the same model as Zillow in the US, Zoopla took public record data on property sales prices and mapped it on the site day one and this as with Zillow has delivered a valuable unique proposition for the company. Nowadays Rightmove and the other sites feature such data but back then the advantage was played well by Zoopla.
Zoopla has now announced its decision to undertake its IPO with an expected valuation of £1,000 million, providing a healthy return for its largest shareholder which has invested close to £80m in the business.
What is most interesting within the news of the IPO is the decision by Zoopla to offer a special share purchase scheme for its customers. The scheme available to existing customers of which there are an estimated 20,000 in the UK - real estate offices and property developers, is a two stage purchase of £2,500 each - one tranche now and one in a year's time. Based on a say a share price of £15, with say 23 million shares on offer, this scheme would over the two years if fully subscribed create a 10% ownership within the industry. A very smart move to tie-in their customers (something I have advocated for Realestate.co.nz in my recent strategic proposal).
To sweeten the pot Zoopla has announced that existing customers will get a 20% discount on the issue price, which they recon represents a discount of £20 million - a great gesture and one that I am sure will attract a significant uptake.
There is another reason for this strategic offer and intent to create a shareholder structure within the industry. Last year it was announced that a collection of real estate companies fed up with spiralling increases in fees and the perceived excessive profiting by these real estate portals (despite the fact that RIghtmove was started as an industry owned site) was going to create a new genuinely industry owned website to champion a fairer (lower cost) portal - sounds like a familiar situation to those in the NZ real estate industry battling Trade Me's fee increase?!!
What was very interesting in the announcement (and I personally do not believe it has much hope of success - have a read of an opinion piece I wrote at the time) was that the new site called Agents Mutual was going to require subscribers to commit to its site and only one other portal - saying to the industry, you choose Agents Mutual and Rightmove or Zoopla - but not both! - consider the influence of being a shareholder in Zoopla on this decision now??
Realestate.co.nz - Where to from here?
I have been fascinated over the past 6 months with the issues facing the real estate industry and Realestate.co.nz as the industry grapples with the issues related to the new pricing policy implemented by Trade Me Property. I have commented on these matters a number of times, each time though, I have thought "what would I have done if I were still running Realestate.co.nz"?
For over 6 years I was the CEO of Realestate.co.nz and in that time faced many challenges and implemented many initiatives. I got some things right and some things wrong; ultimately though I parted from the organisation largely the result of an impasse with the board as to the future direction of the company. I had a view as to the level of investment and structure required to drive the future development and create the leading property website in NZ, it was not the view shared by the board. I lost, that is the reality in business.
Subsequently the company has invested in new developments and undertaken up-weighted marketing as it has sought to leverage the dissatisfaction of the real estate agents to the policy changes at Trade Me Property. These investments have paid off as Realestate.co.nz has strengthened its position which I am delighted to see. However I still reflect on what plan I would have adopted in such a situation.
So purely as a hypothetical exercise and in an open manner for the benefit of the real estate industry I have outlined here my thoughts around a strategy for the future of Realestate.co.nz, a strategy to power it into being the leading digital property platform in NZ. Now clearly this plan is by no means guaranteed to work or would be in any judged to be full-proof. It is merely my opinion and in writing this I am in no way criticising the current management or board. I simply felt the desire to articulate my thoughts.
There are 4 distinct components to my proposed strategy:
1. Engage your customers
In my mind this is the most important strategy for the company. For whilst the website has to deliver a valuable experience for consumers searching for property for sale or rent, the business will be of no value without the support of the real estate industry. In this regard I am not simply talking about support as in the listings. I am talking about support in an evangelical way - you need to empower the industry to support the site and advocate the site. I often stated during my time in the role that the salesforce for the company were not those few account managers (excellent though they were!), but the 10,000+ real estate salespeople who through their everyday contact with consumers could become our full time evangelists.
Real estate salespeople are independent contractors and whilst in the past the decision as to online listing was a matter for the office manager and the admin team the critical importance of online marketing now and in the future requires all salespeople to engage with online marketing for every listing and with every client. To achieve this involvement and evangelical support requires investment in field based sales people together with comprehensive training. The real estate salespeople are the channel to future marketing products and services and need to be supported. I believe that currently neither Trade Me Property nor Realestate.co.nz has more than a couple of field based account managers and/or trainers compare that to the Australian market where REA group alone would have over 250 field based people dealing with customers - that would translate into the equivalent of 50 in NZ, now that might be excessive but I can be sure that if a customer in Morrinsville saw a visit from either Realestate.co.nz or Trade Me in the past year (or two) I would be surprised!
Beyond the critical customer group of real estate salespeople there is another subset of customers whose support the company needs, they are the business owners. Business owners are the 600+ individuals who own and operate the majority of real estate companies around the country. For whilst 80+% of the industry operates out of the 5 major brands, these are brands are franchise groups. The real influence and ultimately the buying-power rests with these business owners.
To empower and engage these business owners you need to provide them with motivation to support the company and nothing screams motivation more than “skin-in-the-game” and that in the case of the company this means real equity. Equity in Realestate.co.nz would be the motivation to ensure commitment of marketing budget and loyalty. That would provide the security of commitment for the company to attain the future vision to be the outright leader in the market.
Realestate.co.nz uniquely could enact this as it is notionally industry owned and a private company. For whilst the current shareholding is split between the REINZ and the 5 leading real estate companies, the reality is that the 10,000+ sales agents and 600+ business owners are disconnected from ownership, particularly as the shareholding of the large real estate companies is tied up in the franchisors to whom the business owner pay their franchisee fees. Effectively the business owners particularly are being asked to continue to support a website that benefits their franchisors at their costs - effectively making them pay twice.
Imagine if a cooperative structure was established much along the lines of Fonterra. Business owners having an equity stake in the website business through a capital raising by the existing shareholders. Shares could only be held by a subscribing and active real estate business. Dividends would be payable based on usage support commensurate with shareholding. Shares could be traded to allow for businesses to enter and exit the industry and thereby allow business owners to realise the value in their continued support of the company.
2. Focus on experiences
The company needs to invest. It needs to create a compelling digital platform that delivers experiences for users that excites and delights. Experiences across all platforms to provide solutions to property buyers and renters, helping them navigate the buying or renting process.
The tablet experience is the most critical at this time, this is the device that you want users to fall in love with your brand and service, capture the emotional early searching part of the home buying process and thereby guide people to then go on to use the more functional smartphone app. Win the app environment and you can effectively ring-fence your users and secure competitive advantage.
The company also needs to think laterally to envisage the next experience opportunity. How could the smart TV be a complement to the lean-back tablet browsing experience?
Realestate.co.nz is a technology platform for the real estate industry. It needs to showcase innovation to the users and go as far as to assist the customers in their quest to better understand the future of digital engagement.
3. Empower consumers
Consumers need to feel engaged and empowered especially around decisions that are complex and involve high risk. The advent of the internet has opened up access to enable consumers to be better informed and to have a true sense of involvement in so many aspects of their lives. This is not reversible. Real estate in someways epitomises this and yet at the same time it is the most opaque industry for data and empowerment. From the simple process of how to find and evaluate an agent, to what is really going on in the real estate market, and what is the best method of sale, there are as many answers as there are individuals willing to share opinions on the questions.
This situation opens up the opportunity for Realestate.co.nz to create a digital oasis of insight and assistance, to be a partner to the home buyers and sellers. This positioning for the company could provide it with an unassailable position of influence, respect and trust. Developing this in partnership with it customers ensures that the two sides operate in tandem and both benefit. It all comes down to data. If the customers could have the confidence to trust and influence the way the market data of transactions is collected, analysed and reported then a single repository of knowledge through Realestate.co.nz would benefit all stakeholders in the company.
The final component of empowering the consumer is almost akin to the final blow to the competitive threat of Trade Me Property to which I refer to private listings. These listings will for ever be the differentiator that enables Trade Me to retain its massive hold over the real estate industry. Cutting them off from this unique differentiator would finally allow Realestate.co.nz to create the winning move. There is no valid reason why private listings should not not be displayed on Realestate.co.nz. To the consumer it makes not a jot of difference, all they want is comprehensive content on a consistent single platform, nothing more frustrating for them than hopping from site to site to ascertain the total portfolio of listings on the market.
As for the attitude of real estate agents to private listings, surely by now the logic must be established that this approach to selling your home will not go away, nor will it undermine the role of the agent. If agents somehow believe that by not advertising private listings on Realestate.co.nz they are in some way cutting off oxygen to these sellers they are mistaken. Equally if they think that denying private sellers access to Realestate.co.nz is some how a demonstration of a value proposition for agents, then the value of agents is not valuable enough. As a final sweetener, surely the potential of $6m of revenue a year would quieten the loudest sceptic, especially if they were a shareholder of Realestate.co.nz
4. Build passionate brand adoption
With a laser-like focus on the customers, a cooperative structure of ownership, matched to a resurgent investment funding to power new innovation, the last component of the strategy would have to be building the brand identity such that the brand becomes a byword for the process, a trusted and recommended single solution to all aspects of the property market.
Clearly the emboldened financial situation for the company as a result of greater support matched to a capital raising would create a war chest worthy of a major brand campaign, however burning the budget on flashy TV adverts does nothing more than stoke the coffers of the TV companies (even if one of them is state owned). What would be needed is an approach to marketing that created a real sense of why Realestate.co.nz is the logical solution. It should be as much about the innovation and experience as it about creative messaging. It should literally wrap itself around the agent process and support the agent in their day-today work as a part of the very foundation of the industry in all aspects of training, materials, communication and success. The brand should be there with the agent in the home of the potential client on the day of the first presentation as much as on the day the contract is signed, as on the day the keys are handed over and then the brand should live on with the consumer through the life of the property. This takes time and takes commitment, however the goal is audacious and yet highly achievable.
That is my proposal to the industry. My view as to how to push home the advantage and ultimately remove Trade Me from the equation, or at least marginalise them to the role of auctioning tractors with a 20 acre farm thown in!
As to the measure of success for the adoption of this strategy, which by no means is guaranteed, you need look no further than the overseas markets whether the digital real estate marketing platforms are reaching stellar levels.
In the UK a market of 60 million population the leading property portal (Rightmove) as a listed company has a market cap of $4 billion and the #2 (Zoopla) is about to list at an estimated cap of $ 2 billion. The US has two leading property portal players both listed companies in a market with a population of 320 million - Zillow has a market cap of $5 billion and Trulia a market cap of $1.5 billion. Finally Australia with just 5 times to NZ population with its powerhouse property portal REA Group topping all of them with a market cap of over $6 billion. These valuations are not reported here as inducements to demonstrate the upside of the future value of Realestate.co.nz, for with this cooperative structure why would the future shareholders sell? The key demonstration of these numbers is to highlight to the industry as to what to expect if Trade Me is given a free run at the future, as its aspiration is to emulate these performance metrics from the real estate sector, and as a consequence the industry directly or indirectly will end up paying to generate the revenues to create the profit to support these levels of profitability, many times their current level.
Properazzi musings on Facebook this week - 23 May
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Been wondering what has been happening between Trade Me Property & Realestate.co.nz?
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The LVR policy - a successful policy for the property market
The Reserve Bank Governor Graeme Wheeler should consider himself pretty pleased with his initiative to reign in the property market. In my opinion it’s been a great success as a surgical tool to address one key part of the economy whilst not significantly impacting the others.
The policy of enforcing a threshold by which banks could not excessively lend to borrowers with a deposit of less than 20% has not only curbed the first home buying sector but also dampened the activity of speculators and investors - the very groups that tend to inflate the market.
There is no doubt that this macro-prudential tool of LVR (Loan to Value Ratio) will be eagerly assessed by other Reserve Banks around the world, particularly the Bank of England at this time as they grapple with a similar inflated property market.
Around this time last year we could see from all the stats that the property market, particularly in Auckland was on a fast track towards a potential bubble. As ever the options for the Reserve Bank were limited as the tool of choice was interest rates, a rather blunt instrument which, effecting all aspects of the economy, tends to cause un-wanted consequences especially in pushing the exchange rate higher and thereby effecting export competitiveness and as a consequence, the earnings potential of the country.
Examining the options, the Reserve Bank must have reflected upon the effect of the restrictions imposed by the retail banks back in 2008 at the time of the GFC to cease lending on residential property at ratios of loan-to-value in excess of 80%. This strategy was the right choice at the time in defraying the risk of property price falls onto the shoulders of borrowers, who were thereby effectively risking all their equity if they had to provide 20+% of the purchase price. This action in 2008 lead to the significant collapse of property sales in that year, a year that started out with a 12 month total of just under 90,000 sales and ended the year at just 56,000 a fall of 38% in a year.
With this test-case the Reserve Bank started to talk the proposal of LVR in the media over the winter months of last year in part to signal that the market was getting too hot and was ready to impose this LVR strategy with little notice.
It was on 20th August last year that the Reserve Bank announced that from 1st October the retail banks would be restricted to 10% of their total value of mortgage lending being of mortgages with deposits of less than 20%.
That announcement lead to a somewhat mild panic in the market with buyers very quickly looking to secure their position of pre-approved loans prior to the implementation deadline. This resulted in property sales in September shooting up from a 3 month average growth rate of around 8% to 19% in that month, before seeing successive months of property sales decline to date.
The Reserve Bank is nothing if not prudent and conservative. The last thing they want to portray in decision making is spontaneity or knee-jerk reactions. Their message is of the classic “this may hurt now, but it better for you in the long term”.
With this as a backdrop to their decision making process, it was somewhat surprising that within 2 months of the implementation of the LVR policy they were making a concession to exclude new builds from the restriction. This was in someways surprising and at the same time illuminating. To my mind this was a very clear early signal that the internal data (at that time not published) was telling them that the retail banks were being far tighter on lending restriction than the Reserve Bank had signalled. Remember, the direction that the Reserve Bank had given was that based on an initial 6 month average, retail banks were not too exceed 10% of the total value of lending to borrowers with less than 20% deposit. The data was showing at that time a level of 12% in October falling to 7% in November and what was to be just over 5% in December. To act in a manner which by their own measure was hasty was a clear indication of early success.
By January the data published by the Reserve Bank had shown that the retail banks were extending new mortgages at LVR of over 80% at below 5%. So low in fact that to meet the initial 6 month average criteria the loan book for March alone could have been as high as 25% and the banks would still have been below the threshold of 10%. These numbers of course represent the aggregated total across the main retail banks, there is no indication if any one bank was more lapse or more restrictive than any other.
Having seen the impact of the LVR policy, the key question for the Reserve Bank was what action was needed on interest rates and OCR. It had signalled for quite sometime that a succession of rates was to occur and delaying this was not a signal the Bank wanted to send; so the rises in March and April were pretty much baked in and implemented.
However now the Reserve Bank sits here in May and have to assess what appears to be a difficult situation. The recent 0.5% increase in interest rates has kept the dollar exchange rate high which is hurting exporters and the general economy and further interest rises will only exacerbate the situation. Set against this is a fast cooling property market where the sub $400,000 sector has all but disappeared (down 32% in April vs prior year). Added to this there is no doubt that the OCR increases flowing through to mortgage rates has further weakened the property market and has pushed a large proportion of mortgage holders into fixed rate agreements. This was probably a much desired outcome by the Bank to reduce exposure of homebuyers to interest rate volatility.
So I would judge (not being an economist) that the Reserve Bank now has the chance to back track on the planned further increases in the OCR at least until later in the year. It also has the ability to make some adjustment to the LVR, possibly as some have speculated to increase it to a 15% threshold. I would judge that this is a medium term solution to be implemented within the next 3 to 6 months. I would further judge that the speculation that the LVR policy could be removed before the end of the year is very unlikely, for whilst the threat of its re-implementation is always a powerful dagger to hold over the market, I sense that the Reserve Bank is not wanting to be seen to implement a innovative new policy as this still is and then to remove it, especially in an election year where political considerations weigh heavy on the media's mind.
This may be a viable outlook, it may not be - I am merely providing my own interpretation, however as I stated at the beginning I would judge that the Reserve Bank governor is quietly pleased with himself and his advisors for the implementation of a policy that effectively can be used to ring-fence the property market speculative bubbles of the future without damaging the wider economy.
Spring has arrived in the US and with it a new battle of real estate websites
There is a war being fought right now in the US - a high stakes tussle between the 3 aspirants of the property portal industry. The prize is a slice of the more than US$6 billion a year spent by the real estate industry in marketing, coupled with the potential of a foothold into the influence of more than US$60 billion in transaction fees a year. By comparison the NZ comparable numbers are around $100 million in marketing and $1.4 billion in fees.
The three players in the market for the eyeballs and influence of the buying public of the US are Realtor.com, Zillow and Trulia and each have today rolled out their new season TV commercials perfectly timed for the Spring home buying season.
I have always been partial to TV advertising and in some ways I'm sad that the heyday of TV commercials is past and their relevance is diminishing - they are the ultimate creative medium, as creatives and production crews combined with massive clients' budgets all seek out that holy grail for that one special ad that transforms a company and becomes enduring and memorable - think Coke ads and Toyota ute ads.
The latest collection of adverts for these real estate portals reflect perfectly the differing personality of these three companies and their distinct point of difference and viewing them further reinforces these differences.
Realtor.com
The industry stalwart, serious, factual, professional. The site is the 'official' site of the National Association of Realtors and as such focuses on facts - more listings, more accuracy, more up-to-date. All wrapped up in a warm 'idealised' family of wholesome values from a place only existing in TV commercial land - lightly glazed with humour.
Zillow
Zillow is the leader in eyeballs at the moment with a staggering 77 million unique visitors per month and plays an emotional card creating beautiful vingettes of real people 'looking for a place for your life to happen' rather than a boring functional requirement to move home, or just find or buy a house. It's another tear jerker to complement the homecoming advert from last year. In some ways it is similar to Realtor.com full of purity and the idealised perfection of a perfect couple - mid market, middle America. The search functionality featured in the ad might have been more convincing if the search term was "tree house" instead of 'big tree' but that would have killed the punch line and I just did!
Trulia
Trulia has the appeal of being the battler in this threeway tussle, not the scale of Zillow and not the authority of Realtor.com, however they create a unique experience, they focus on real situatons and inject subtle humour and insight that is hyper-local which is important. It is the subtly l love, the insinuation that is made of the situation - creates memorability and this ties into the campaignable idea of 'Moment of Trulia' - gets my vote. Shame though about the competition as the end frame - seems to spoil somewhat the authenticity and emotional connection.
Properazzi musings on Facebook this week - 16 May
Property statistics can be misleading
When the news media report that the median house price in Auckland has risen by 13% over the past year, from $562,000 last March it's now $637,000 - that’s an increase of over $6,000 per month!
This type of property news infers that property values are rising, and rising fast; as it's getting more expensive to buy houses - that would be a good interpretation - right?
Well actually no. You cannot make that inference. To hear that the median sale price is rising does not infer values are rising by the same amount.
Now you may consider that I am arguing semantics. However I regard the difference between the rise in property value and the rise in median sales price highly significant. A significance that too often seems to be ignored or glazed over for the sake of a good headline.
The median price is a statistic calculated from the aggregated data of all the properties sales in a month in an area - a suburb, a region or the whole country. It should not be taken as an indication of the likely trend in value of a property in that self-same area.
Each year just less than 5% of all properties are sold - that is 1 in 20, which tends to amount to less than a handful of a properties on any given street around the country. The fact is that these properties recently sold might not be representative of all of the properties on the street in general.
For example, if I were to say to you that the median price for your street had doubled in a year from $300,000 to $600,000 would you think that the property market had gone mad and you were sitting on a gold mine? - sadly not. In this purely hypothetical example the likely fact was that the 3 houses sold last year were actually all apartments in that development at the end of the street and all the sales this year were of 4 bedroom properties along the street - you get to see the problem with the data?
This is in my opinion, part of the problem we have witnessed over the past few years in the inner city suburbs of Auckland. Suburbs that in some cases have seen rises of over 70% in 5 years. In these suburbs the properties being sold are in the main traditional 3 or 4 bedroom homes on 400 to 600m2 sections. So can we say here that values have risen by 70% in these suburbs as the median price indicates?
The truth is that rather as in the previous example, were the comparison was between houses and apartment, in these suburbs the comparison is more likely to be between un-renovated properties and renovated properties.
Look down any street in the inner city suburbs of Auckland and you will see the impact of gentrification and many hundred’s of thousands of dollars of renovation costs.
Here is a simplified summary of what has been going on. In 2009 and 2010 smart, savvy buyers (investors, developers and capable homeowners) started buying up ex-rental properties in these suburbs for prices around the $700,000 to $900,000 range thereby establishing the then median price for the majority of sales in these suburbs. Gradually over the past 4 years these properties have been renovated and placed back on the market following renovation projects costing anywhere between $200,000 and $600,000. The properties then have been selling for between $1,250,00 and $1,600,000 making a healthy return for those players in the market and in the end impacting the median sales price driving it up from the $800,000 range to $1,400,00 range a 70% rise.
These renovated properties whilst in the main are still 3 or 4 bedroom properties on 400 to 600ms sections, however they are in many respects new homes as effectively all that remains of the original property is the floors, walls and roof. These improvements have fundamentally changed the inherent value of the property - as you would expect when a renovation costs averaging $400,000. But it is wrong, and does not follow that all properties in these streets / suburbs are now valued in the range of $1,400,000.
Here's a snapshot of inner city renovations of the past few years - then and now:
Further proof (if needed) of this situation, you need not look further than a couple of recent profile articles from the NZ Herald highlighting renovations in the inner city suburbs of Auckland
Grey Lynn - purchased Oct 2010 $604,000
Renovaton - new bathroom, new kitchen, redecoration
Sold 2014 $835,000
Ponsonby - purchased 2002 $620,000
Current rating valuation (based on QV computer generated valuation model) 2011 $980,000
Extensive renovation
Auction 25 May - price expectation around $2,000,000
Now there is no doubt that these properties were rightly valued as a result of the selling price on the day. That was the price the winning buyer was prepared to pay for them, however does it mean that all of the other 80+% of properties in these suburbs have also risen in value by 70% ? - clearly not.
However as the saying goes and as all real estate agents are keen to observe - ‘A rising tide lifts all boats’. The problem illustrated here is that the statistic of median price is being misinterpreted as valuation.
The other compounding factor is that the source of property data on valuations, QV actually rely on sales price data to establish valuations. There computer based algorithm utilises recent sales data of similar properties (judged by size, not standard of refurbishment) to establish a current valuation. This valuation is then the benchmark by which they judge the sale price and that variance drives there monthly property vales trend analysis.
It is only a registered valuer undertaking a full assessment of a property through an on-site visit and evaluation that can accurately assess the true market value of a property.
Is there a better way? That is the question
Clearly a property sold after significant renovation or alteration cannot be judged to be representative of all properties in an area, whilst a property carefully maintained and resold after 3 years would be representative. Maybe this is the question that needs to be added to a more comprehensive data set collected by the Real Estate Institute. Through their comprehensive process of recording all sales by licensed real estate agents they can then provide a more accurate and representative price indicator so we avoid the inference that median sales prices are judged to be the same as property values, and in so doing improve the reporting of true values.
Trade Me Property adds map based search
Call me cynical, but I struggle to feel that our online property searching experience here in NZ is taking bold new leaps forward with the announcement of 'map based search' from Trade Me Property.
It also appears that I am not alone in this regard as my ever insightful news-service of Twitter clearly shows.
Now the cynicism may be from a 'geek' perspective as both Layton and Dave are certainly respected in the realm of NZ Geek Society. However as Dave rightly asked me "how many years ago did we (realestate.co.nz) do that?" - the answer is 6 years ago, January 2008 as this article I wrote on Unconditional testifies.
I certainly go along with Layton's view that the solution is well executed - something that Trade Me excels at - delivering a great user interface, great design and an intuitive feel.
However I keep coming back to this fact that this is not so much a step forward as a very long overdue catch up.
To be at least taking a step forward, Trade Me should have executed this service with the ability to "draw your own search area" as many real estate websites offer around the world. This example from Trulia in the US highlights this capability - allowing you to be very granular and definite in your search area for property, in this case, no more than 2 blocks from the beach offering just 7 properties that suit my specific requirements.
Another even better execution I found was by Homely - a new innovative start-up real estate website in Australia - far from being a multi-million dollar company, this small passionate design lead team have produced a lovely execution of "draw your own search area".
Properazzi musings on Facebook this week - 9 May
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Properazzi on Facebook - w/e 2 May
I have in the last couple of weeks changed my perspective on Facebook. My long term allegiance has been to Twitter as I have judged Facebook to be too jumbled and not worthy of engagement for what I focus on which I best describe as ‘long-form’ articles.
This change of focus is the result of a pragmatic realisation that in the course of a week there are moments when I have a thought or a reaction to something I read or hear about and I want to share it, but creating a full article seems somewhat of overkill and the 117 character limit of Twitter is too constraining. This is when I have turned to Facebook and have found a large and engaged audience. In some cases the pieces I have posted on Facebook have had a reach of over a thousand people, far in excess of what most of my article achieve - not fully accepting that reach and page views are relevant comparative metrics.
With this new approach to the use of Facebook I have decided that for those readers of this site who do not live constantly with their Facebook app open all the time, I will on a weekly basis aggregate these short-form articles from the Properazzi Facebook page into a single article here on this site - timed to coincide with the weekly email at the end of each week.
So here are the collected articles and insights for week ending 2 May:
The LVR policy imposed by the Reserve Bank last October continues to constrain the property market
Post by Properazzi.
TVNZ Breakfast interview discussing the issue of affordability and & LVR impact
Post by Properazzi.
Have you tried using the words of Winston Churchill to sell a house??
Post by Properazzi.
Is this the worst listing photo you have ever seen ??
Post by Properazzi.
Trade Me vs. Real Estate Agents : 5 months on, could the boycott be growing?
Back in November last year when the news of an agent boycott over proposed fee increase by Trade Me hit the mainstream media, I was pretty sure that sanity would prevail and more importantly vendors would not be used as 'Pawns' in this issue of internal costs of marketing.
It's now 5 months later and the issue is still not resolved and as each week passes I would judge that the balance of power is tipping significantly in favour of the agents.
Back in February I reported that the then two highlighted areas of the country where the initial boycott had begun - the Hawkes Bay and Hamilton still had a situation where Trade Me listings were significantly reduced and in some cases dominated by private sale listings. Revisiting the situation today shows a continuing gulf of listing stock stock between Realestate.co.nz and Trade Me Property in these areas.
Taking the Hawkes Bay region - as at this week Trade Me Property is displaying less than half of the property listings for sale than Realestate.co.nz (based on all house types as well as lifestyle property).
The data analysis of the Hawkes Bay I have undertaken this time has broken down the listings by real estate company.
As reported at the time, the regional players of Property Brokers and Tremains who between them represent close to 40% of all listings in the region continue to boycott Trade Me Property; they currently feature less than 1 in 20 of their active listings on Trade Me Property (most of which are listings added by the vendor with the agent details). This means that from amongst the 1,594 active property listings on the market at this time in Hawkes Bay, Tremains and Property Brokers between them are not displaying 583 of them on Trade Me - that is significant over 500 properties for sale from the two big players in the market not being displayed on Trade Me Property!
Given the extent of this boycott it is clear that these companies are not facing any adverse reaction from sellers - properties are being listed and sold in the Hawkes Bay without the exposure on Trade Me Property.
Widening boycott?
What is also significant from the Hawkes Bay data is the extent to which Harcourts are boycotting Trade Me Property, with less than half of their listings in the region displayed on Trade Me, that amounts to another 181, adding to the 583 from Property Brokers and Tremains not featured on Trade Me.
The extent of this boycott by Harcourts is dramatically seen when doing a search on Trade Me Property for Harcourts listings by listed date - there have only been 3 new listings across the whole of the Hawkes Bay region in April from Harcourts whereas in fact from data on Realestate.co.nz shows the total number of new properties listed by Harcourts in the region in the month was 227.
The National Picture
Applying this analysis to the national picture, Trade Me Property is displaying 8% less listings of property than Realestate.co.nz (this total includes private sale listings).
The analysis below details the extent of the support or boycott by real estate company. Clearly Barfoot & Thompson and Ray White are at this time supporting the use of Trade Me (or as an alternative conclusion these companies agreements with Trade Me have yet to reflect the new charging rate).
Whereas Harcourts are only featuring 7 out of 10 of their active listings on Trade Me Property. Harcourts are the largest real estate company in the country with over 190 offices and currently 8,315 listings of properties for sale.
Equally as significant is the analysis of listings from Bayleys and LJ Hooker who also appear to be boycotting Trade Me Property which in the case of LJ Hooker with 2,664 active listings on the market results in only 1,755 of them displayed on Trade Me Property.
Boycotts in Other Regions
Further investigation of the listings data shows that in addition to the Hawkes Bay, the Manawatu / Wanganui region is also witnessing a boycott of some significance.
From amongst the 3,223 active listings of properties for sale across the Manawatu / Wanganui region (using the boundary definition of Trade Me) as showcased on Realestate.co.nz, just 2,567 of them are shown on Trade Me Property (actually somewhat less as this number includes private sale listings). The breakdown by company, shows that it is only Ray White that has almost full support for Trade Me Property whilst Harcourts display less than a third of their listings on Trade Me Property. Equally other key players in the market such as Professionals and LJ Hooker display less than 70%.
The anomaly though is Property Brokers. This region is their heartland where they hold close to a 30% share of all listings on the market, yet they are displaying over 60% of their listings on Trade Me Property - a very different situation than that in the Hawkes Bay.
So in conclusion it looks like the boycott of Trade Me remains and if anything is growing, given the extent of the Harcourts representation (or rather lack of it!) on Trade Me Property. In my view as each week passes without some action or decision or negotiation (which clearly will be going on behind closed doors) the market position of Trade Me Property weakens and the muscle flexing by agents appears to be working.