Australian Online Real Estate Market Growing

Real estate is a vertical market with significant opportunities in Australia for Internet enablement. According to a recent survey from NPD Research, of those US users in the market for real estate, 64 percent have shopped online, the vast majority (88 percent) are looking for information on the residential property market.

The length of the search process, the importance of information and comparison in that process, and the scale of paperwork involved in closing a real estate transaction make property a prime candidate for the Web.

In Australia, the business models of real estate players are driven by a combination of advertising (dependent on page impression volume) and listing fees.

The two major players in Australia in the real estate space are www.realestate.com.au and www.property.com.au, both of which have initiated major offline media advertising campaigns in a bid to gain online market share.

Competition for online “eyeballs” highlights a difference between the online and offline media, with general web sites typically viewing listings as a means to generate advertising dollars, while real-estate sites see them as a primary source of content.

In the residential market segment, there are approximately 8,573 real estate agents, an increasing proportion of which are choosing to supplement their traditional advertising with online advertising by supplying their listings to online players. Realestate.com.au currently charges its member base of agents $150 a month for unlimited listings, who then in turn charge prospective vendors a fee for listing online.

In the future, the business model for real estate is likely to evolve to being “transaction centric”, as players move to compete in lucrative markets such as mortgage origination. In Australia, total outstanding mortgages are approximately $232 billion (RBA), and an increasing percentage of new mortgages are likely to be initiated through the web. Myers Internet Services projected in June 1997 that US Net mortgage originations accounted for nearly 1 percent of the $4 billion 1997 total, estimated to grow to 12% by 2001.