REA continues to strengthen its position

Executive Summary: The print to digital migration is entering an advanced state

• Australia’s property market remains robust both in terms of house prices and building approvals. This will support ongoing growth in all overall classified and display expenditure by home sellers and real estate agents. Median house prices in metro areas (notably Sydney $780,000 and Melbourne $585,000) are on all time highs having achieved double digit growth rates in the past 12 months. Foreign investors and low relative interest rates has fueled these trends. Likewise the the loans market is very large and continues to grow, though there has a been a shift in recent times towards higher density housing (now around 49%) relative to detached homes

• The structural shift from print to online is now entering an advanced phase (estimated to be in excess of 80%) and as such the key players (REA and Domain) will need to change their revenue models, enter into adjacent markets (e.g. finance) or invest offshore in high growth markets to sustain the growth rates that have been achieved in the past five years

• Both REA and Domain to compete strongly in a duopoly market for classifieds, with REA Group remaining in the number one position. Domain has focused heavily on its mobile app to strengthen its position and and has made some ground in terms of reach

• Over the next three to five years we anticipate that there will be a number of new participants that enter the market with disruptive or niche business models, which we will explore in our next outlook report