Property commentator Alistair Helm says its likely that real estate agents will change their fee structures in response to the current stand-off occurring between some agents and website Trade Me.
Tensions have been running high between the real estate industry and Trade Me, with some regional agents withdrawing property listings from the website. This follows Trade Me changing its listing fee structure late last year.
Helm, who has his own website properazzi.co.nz and was the founding chief executive of realestate.co.nz, told interest.co.nz the fee change by Trade Me resulted in "…an unfortunate situation where the industry really didn’t see this coming".
"They got a little bit caught in the headlights and they haven’t planned for it and they’ve reacted a little bit short-sightedly by in some areas of the country removing listings from Trade Me’s website.
"In my mind that’s a dumb move, it achieves nothing but probably alienates them from their clients and potentially, as has been commented, leaves them vulnerable to legal action under various aspects of the law.”
Helm said it was a proven fact that "consumers like Trade Me". He said that 80% of the time spent looking at online property was spent on Trade Me.
"The consumer is not going to walk away from Trade Me just because some listings are not there. Trade Me still has the bulk of listings – and the eyeballs – and that’s the consideration the industry needs to keep in mind."
He said any large scale pullout of the real estate industry from Trade Me would likely result in "very disgruntled clients".
"[The clients] potentially would just say: 'Well I use Trade Me to look for property, Trade Me offers me the chance to list my own property. If you don’t think it’s a good marketing platform, which I don’t understand why you are putting this approach to me then I’ll list my property on Trade Me , I’ll either list it myself or I’ll list it with your name on it, but I think it’s worthwhile'," Helm said.
He said that a similar situation had arisen around 2007-08 when a number of real estate firms refused to list on Trade Me.
"They found their on-the-ground real estate sales people were being confronted with this challenge everyday – and that’s what pushed them to use Trade Me in the first place – and that may happen again. And that just damages credibility and professionalism in the industry - that the consumer is doing the job that the agent says this is why you pay me 4% commission for."
Helm said there was a definite risk that more real estate clients would simply just be driven to taking up private listing with Trade Me.
"The marketing of property in New Zealand is completely democratised. It is Trade Me," he said.
"For $400 I can achieve the same impact as a real estate agent in terms of inquiry. That’s not to say I can sell it as easily but I can generate enough inquiry or the same inquiry by doing a private listing as doing an agent listing on Trade Me – and that’s what the industry needs to keep their mind aware to."
Helm said he believed that the real estate industry would resolve the current conflict.
"It’ll disappear - because the industry need Trade Me and they will accede to the realisation that they can’t boycott Trade Me."
He believed that real estate firms may start something like an "introductory service charge", of say perhaps $250, which would include listings on Trade Me and Real Estate co nz as well as the firm's own website.
"Whether they adjust their commission because of it, that would be interesting to argue."
'House volumes settling'
On the current housing market, Helm said that the volume of transactions now appeared to be settling at around 80,000 a year, which he said would be a good level.
"It's a smaller market but a good number of transactions."
Helm said that the Reserve Bank's 'speed limits' on high loan-to-value lending introduced in October had "certainly had an impact" and this was going to continue to be a factor. He thought it would be tough for bottom end of the housing market to pick up. This is the area that has most been affected by some people no longer able to raise enough money to buy houses.
However, Helm didn't expect that anticipated mortgage rate rises - possibly from as soon as next month were likely to cause a "massive contraction" in the housing market, as mortgage rates were likely to merely return to "reasonable levels" compared with recently very low levels.
The housing market was likely to be supported by growing confidence in the economy, while current high levels of immigration continue and put pressure on housing stock.
Helm said house prices were likely to grow at a slow rate this year than last year's 10%, but he thought the rate of growth might be about 6%.