Top property website accused of price gouging

If you haven’t bought or sold a property for a while, you might not know that as well as having some of the highest house and apartment prices in the world, Australia also comes with one of the world’s highest real estate advertising bills.

And this week news broke that Australia’s competition watchdog – the Australian Competition and Consumer Commission (ACCC) – is in the early stages of investigating News Corp’s REA Group for allegedly price gouging, according to this ABC news story.

Realestate.com.au is a giant that uses postcode-led pricing to set rates for people who want to sell their property with a listing on the site sometimes costing upwards of $5000. That means you could be charged more for advertising depending on the postcode where the property sits.

REA Group is Australia’s seventh biggest online brand and made $1.453 billion in revenue to 30 June 2024 – it positively out-monopolises its competitor Domain. But big reach brings big scrutiny.

The Australian Financial Review has also reported that the Australian Competition and Consumer Commission (ACCC) is investigating whether REA Group is using its power to push up costs unfairly for agents and sellers.

Property Investor Magazine says real estate agents report that advertising prices have risen more than 5,000 per cent over 15 year. According to industry figures, that’s a 50-times increase from the $75 cost back in 2009 for those top-priced listings.

The regulator issued REA Group, a $32 billion listed company, with a Section 155 Notice, requiring the company to provide further information on the matter. REA Group responded by saying it is cooperating fully with the ACCC and “remains committed to providing value and flexibility to its customers”.

Property ad price hikes

The probe follows complaints from agents and consumers about steep rises in listing and subscription fees. The ACCC has now issued a legal notice, demanding REA hand over details of its subscription pricing.

Agents say they have no real choice and have to pay to list with REA or get buried. And since the company controls so much of the online real estate market, many feel REA sets the rules with little pushback.

“We were told by our real estate agents we could advertise in Realestate.com.au alone, or there and Domain as well, but there was no point in advertising in Domain alone,” says Flat Chat’s Jimmy Thomson.

The ACCC wants to know if these price hikes reflect real value or just monopoly muscle. For now, sellers and agents are footing the bill while the watchdog takes a closer look.

REA dominates the online real estate listings market, drawing more than four times the traffic of its closest rival, Domain. As a result, many sellers feel forced to pay whatever REA charges to get their home seen. On the other hand, more eyeballs on the ads should mean more bidders for the properties.

However, ABC is reporting that from July 1 REA’s subscription fees to agents will rise, in some cases by nearly 80%. These costs are often passed on to consumers.

REA defends its prices, saying they reflect the value of the service and investments made in technology. But critics argue the service costs the same to deliver regardless of postcode.

The ACCC’s probe could take months, but the question remains – are online monopolies (hello Google, hello Meta, hello Airbnb) wielding market power in ways that benefit markets and consumers? Only time will tell …