Australia’s new industry-backed online portal could weaken REA Group and Domain if it adopted a policy being used in the UK.
Douglas Driscoll, CEO of Starr Partners real estate, said Australia should study the UK, as both markets feature listings duopolies that are about to be challenged by industry-backed rivals.
Squiiz is currently undergoing a ‘soft launch’ in Australia, while OnTheMarket.com, its UK equivalent, is scheduled to launch on 26 January, 2015.
Mr Driscoll told Real Estate Business that agents wanting to use OnTheMarket.com must agree to advertise on only one of the other two main portals.
“I see it very much as a parallel universe, in that the industry there is suffering from the same thing we are here in regards to exponential increases in portal advertising costs,” he said.
“The strategy is that OnTheMarket are trying to significantly dilute [the duopoly’s] market share, and in doing so looking to relinquish some of the power and control they have over the industry, and make the cost of online advertising far more competitive and controlled.”
Mr Driscoll said this rule had received “really strong backing” from UK agents, and that Squiiz should consider a similar rule to weaken REA Group and Domain.
“If Squiiz was to introduce that rule, I think agents would really welcome it. I think agents are almost looking for a reason to drop one of them,” he said.
Squiiz chief executive Nick Christian said Squiiz was aware of OnTheMarket’s policy but had not considered introducing something similar in Australia.
“You’ve got all sorts of issues around the Australian Competition and Consumer Commission and collusion,” he told Real Estate Business.
Mr Driscoll said one danger of adopting OnTheMarket’s policy is that it would be a “high-stakes game” for the Australian industry.
He said the move could backfire if agents chose to abandon either REA Group or Domain en masse rather than depart both in similar numbers.
That would run the risk of turning either REA Group or Domain from a duopoly into a monopoly, he added.
Mr Driscoll also said the aim should be to boost competition rather than kill off one of Australia’s listings giants.
“If you ask any agent or agency principal, it’s not that they necessarily want to do away with realestate.com.au and Domain – far from it, because they appreciate and value the service they provide,” he said.
“But they just don’t feel like they’re getting for value. They genuinely believe the cost attributed to online property advertising is excessive and is going up exponentially.”