Member log in

Trade Me will probably lure back real estate listings from rival after backing down on fees

Trade Me Group [NZX: TME], New Zealand's largest auction website, will probably lure back real estate listings from its rival realestate.co.nz after yesterday backing down on a 10-month push to hike fees under a new structure, an analyst says.

The Wellington-based company's shares have shed 24 percent since October last year, lagging a 9 percent gain in the benchmark NZX 50 Index over the same period, when the company tried to boost revenue by shifting all real estate agents onto a fixed fee-per-listing structure from a capped monthly subscription plan. Trade Me backed down on the plan yesterday following resistance from some agents, and will now offer either a lower fee per listing or a higher capped monthly plan.

"We think Trade Me's revised fee structure is a necessary back-down in the face of strong agent opposition and will result in a recovery in listing volumes," Stephen Ridgewell, an analyst at Craigs Investment Partners, said in a note. " Agents reverting to the monthly subscription fee - which we think will be most agents - will be incentivised to place all their listings on Trade Me. This should lead to a recovery in Trade Me's market share of listings."

Trade Me's share of listings has fallen to 84 percent of the total listings of industry-owned competitor realestate.co.nz from 87 percent in June, Ridgewell said.

Still, an improvement in the volume of listings will likely be offset by a fall in average yield, leaving the brokerage's overall forecasts for Trade Me's property revenue relatively unchanged, Ridgewell said.

In the year ended June 30, Ridgewell expects a 20 percent rise in Trade Me's property yield to be offset by a 6 percent reduction in volume, resulting in a 14 percent gain in property revenue to $26.5 million. Trade Me will report its 2014 earnings Aug. 20.

For 2015, Ridgewell is forecasting a 12 percent gain in yield to be offset by a 4 percent decline in volume with property revenue up 8 percent to $28.5 million.

Shares in Trade Me touched $3.36 in intraday trading today, their lowest level since April 2012. They recently traded at $3.44.

(BusinessDesk)

Comments and questions
3

The momentum is now with realestate.co.nz. Cannot see real estate agents going back to Trade Me. Why would they? Once bitten, twice shy.

Trade Me had it all the way to 2014 but pure greed and arrogance, as usual, have backfired big time.

It's sad to watch an iconic company Kiwi's were once proud of, slowly be eroded by poor choices, shortsightedness and ultimately greed.

Hope that the real estate companies hold their ground and not return to Trademe. This company needs to know that greed is going to cost them.
A bit like going to a buffet table, being a greedy-guts by overloading your plate to the astonishment of your fellow diners. You're stuck with the impression you've created.