Property Sites' Threatened By Start-Ups' Biz Model Innovations

imageBoth traffic and revenue for property sites is dropping in the recession: unique users to UK real estate sites were down eight percent year on year to 6.1 percent in December. But as established sites suffer, opportunities open up for smaller listings start-ups willing to experiment with their pricing and undercut the competition., which was funded to tune of £3.75 million in January, has seen its traffic increase and last week launched a pay-per-lead model whereby buyers pay £1 and sellers £5 for each listing that leads to a sale. Unlike most property sites, ads are free to list and there are no minimum commitment obligations or subscription fees.

The site’s founder and CEO Alex Chesterman, previously of LoveFilm, tells that, while there are large number of property sites, the housing industry has yet to benefit because “the leading portals have so far resisted adjusting their models away from high fixed fees”. Zoopla has the added advantage of holding price information for areas, streets and more than 15 million houses, which drive traffic to the site: one million unique users in January. The site has recently hired a sales manager and Chesterman even hints at foreign expansion “in due course”.

In its full-year 2008 report release on Friday, the country’s biggest property site announced revenues of £74 million, up 31 percent, and profits 33 percent higher at £41 million (release). But much of the good in those figures was generated before the UK hit recession: house-buying is now at a 35-year low and by December the site’s traffic had dropped 16 percent year-on-year to 1.91 million monthly unique users. With sites like Zoopla and offering free listings on a pay per lead basis and new site cutting out estate agents almost entirely by letting people set up their own sales pages — how long can the UK’s big property portals rely on estate agents’ custom before having to innovate themselves?

(Photo by: Blech)


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