Industry believes P24 subscription increase is cause for concern

Mar 5, 2018 | Local Property, Newsletter content

On average, in the highest lead bracket, the subscription price increase is 20%, and estate agents are not happy
Last week, Property24 sent out a ‘Dear Valued Customer’ email, alerting subscribers to their annual subscription price increase. The letter began by highlighting the platform’s growth. It went on to say: “We are proud of what we have been able to deliver to our customers. In that spirit, please take note of the new fees, effective 1 April 2018.”
On average, in the highest lead bracket (251-750 for sales and +300 for rentals in high interest areas), the price increase was 20%.

Rumblings in the industry are along the lines of “totally out of line”, “it is shocking”, “it will cripple the small agencies and it’s taking advantage of of the larger agencies”, and “they’re punishing the loyal customers”.

Property24 justified the increases saying the rates come off a historically low base and some ‘catch up’ has been necessary. This catch up relates to recouping the historic investment in building the portal to its current position. They say they have endeavoured to spread the cost per lead more evenly.

Property Professional got official, on-record comment too…

Bryan Biehler, managing director, Huizemark

“Obviously Property24 is under pressure from Naspers, their holding company, to improve their profit margin and bottom line, so their substantial price increase is understandable to some degree. Rebosa, on behalf of the industry, has prudently had the foresight to plan ahead and put steps in place to try and keep Property24 competitive and ‘in check’, with the close association between the Industry and Private Property. This association is specifically designed to have input and engagement with Private Property regarding any price increases, which are unfortunately part of life.”

Herschel Jawitz, CEO, Jawitz Properties:

“I am concerned about the significant fee hikes from P24 for the year ahead. Although not surprising, as similar rate increases were put through last year, the rate increases are way in excess of inflation. The challenge is that P24 has established itself as the dominant portal delivering the most leads to real estate and as a result is able to change a premium for the leads that they deliver.

“The situation may have been made worse by the recent deal between a consortium including the Caxton group and industry with Private Property, the number two portal in South Africa and P24’s main competitor. This emphasises the need to have two strong portals in the market.”

Simon Bray, CEO, Private Property:

“Property portals like Private Property and Property24 have continued to show excellent growth as consumers to migrate their home search online. There can be little debate that the absolutely best place to advertise to potential buyers is on these platforms.

“What is up for debate is the aggressive pricing strategy from Property24. It is just this type of behaviour that fosters mistrust and frustration between the real estate industry and the portals.

“The truth is that the industry and the portals need to work together to remove the barriers between each other and focus on delivering high service levels to the property shoppers that both of us serve. Turning the screws on price every year will just lead to a fragmented and hostile property market for all.”

Bruce Swain, CEO of Leapfrog Property Group:

“Over the past few years Property24, which is currently the dominant property portal in South Africa, has aggressively increased their annual subscription rates. These increases do not to have any relation to inflation, but rather seems to be an anti-competitive move by a powerful company – the 2018 fee hike leads, in the case of certain estate agencies, to a 34% increase in spending per month, excluding VAT. This is an exorbitant amount and will force many agents to either cancel their subscription, or to scrimp on other marketing initiatives, which will ultimately be to the detriment of sellers. The industry is outraged, and I believe that many agencies could well end up terminating their relationship with Property24.”

What’s your take on the increases? Are they justified? Will you continue to pay them? Please let is know on the Property Professional Facebook page.

Words: Property Professional