Online property advertiser REA Group says it is working to solve the problems that led to a revolt by real estate agents over large price hikes.
Hundreds of real estate agents recently united to combat the pricing power of REA – the operator of realestate.com.au and Australia’s biggest online property group.
The agents set up a rival venture and appointed a media buyer to negotiate advertising rates on their behalf, in reaction to what they said were REA’s steep ad rates and a new price structure that lifted rates for properties being sold in upmarket suburbs.
Speaking after the company’s annual general meeting, REA chief executive Tracy Fellowes said the problem was being solved through a freeze on prices for residential listings until the start of January 2016.
The new pricing structure was also being simplified, by reducing complexity and price points, she said.
“We made some refinements to pricing we announced at the beginning of the financial year,” Ms Fellowes said.
“I would say it’s listening to what our customers tell us, there are times when a customer is going to give you feedback and you say `we have some differences’.
“But you also want to take on board what your customers say – we introduced a level of complexity to their business, you don’t want to do that and make it harder to do business with you.
“The decision to make no price changes to our residential products until January 2016 was to provide a level of certainty, there wasn’t any certainty we were going to do it earlier than that, but by making it that day we gave a clarity that helps them plan their businesses and marketing schedules with vendors.”
REA, which also has operations in Europe and Asia, last week announced a 31 per cent increase in September quarter earnings to $63 million, which followed a 37 per cent rise in annual net profit to $149.9 million in 2013/14.
Ms Fellows told the meeting REA was looking forward to a strong Spring selling season in Australia.
REA shares were up eight cents at $45.08 at 1440 AEDT.
Some shareholders questioned the wisdom of the company’s heavy overseas investments to chase growth, given a failure in the UK and weak performances in Asia and Italy.
They also said there was a lack of independent directors on the board, those not tied to 62 per cent owners News Corporation, who would question the strategy.
However chairman Hamish McLennan said he sees terrific growth potential through the company’s recent US investment.
Last month REA announced its intention to acquire 20 per cent of US digital real estate business Move Inc.
“The US is the world’s largest residential real estate market and we are excited to be partnering with News Corp for this transaction,” Mr McLennan said.