Signs of life in UK property market: Property portals and classified market innovations

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Signs of life in UK property market: Property portals and classified market innovations

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Signs of life in UK property market: Property portals and classified market innovations
This is the first of three reports on the classified verticals of property, autos and jobs
This section describes the overarching transition from Digital 2.0 to Digital 3.0 business models (see next page), then turning to trends for specialist property media in 2019 and 2020
Transition from Digital 2.0 to Digital 3.0:
  • Expenditure on UK classifieds of £1.7 billion in 2018 represents more than a 50% decline since its peak in 2004. Print media has declined 90% in that period, masking buoyant digital media expenditure
  • In every vertical, the print to digital transition of expenditure has favoured a first mover, realising network effects on both the user and advertiser sides of the marketplace, leading to dominant positions that challengers find hard to disrupt—hence their reliance on Digital 3.0
  • In every vertical, specialist media have moved beyond match-making to coordinating activity on all sides of the platforms they operate, growing revenue by complementary service provision where feasible. Digital tools can only deliver limited efficiencies to the time required to purchase big-ticket items like homes and used cars
  • In property, the low tide of transactions has cemented the reign of Rightmove and condemned challengers to low traction, including Purplebricks, a direct to buyer marketplace, and estate agent led OnTheMarket. No 2 Zoopla stepped back from marketing in 2019 under new owner Silver Lake, owner of Go Compare and a portfolio of other brands, which could deliver a new value proposition for consumers in 2020
  • Auto Trader reigns supreme over the used car marketplace, where dealers are buyers and/or sellers in the light of fluctuating demand on their forecourts from consumers. Auto Trader’s revenue and margin growth in 2019 reflects mainly an upsell of dealers to Digital 3.0 tools as used car volumes fell mildly in 2019
  • Zoopla founder Alex Chesterman is now behind Cazoo, disrupting dealers by home deliveries to buyers of a fixed-price inventory of cars supplied by British Car Auctions (BCA). In property, acquiring inventory to sell—Zillow and Carvana in the US—is regarded as a high-risk venture relative to intermediation
  • In the layer of the recruitment industry dedicated to professionals, Indeed and LinkedIn are seeking to monetise employers through tiers of services typically outsourced to recruiters, augmenting the scope of data on applicants to cull them better and communication tools to cultivate possible recruits
  • Google, Facebook and Amazon have a history of deploying solutions and recruiting market specialists, only to retreat later when ventures disappoint. But all three platforms now have live developments in play

Contents

Introduction: classifieds are slow to transition from Digital 2.0 to Digital 3.0

Evolution of online listings business models: the stubborn success of ‘Digital 2.0’

Classified markets overview

  • Economy: soft business and consumer confidence
  • Print to online transition: game over
  • Classified advertising expenditure by medium
  • M&A, start-up and investor activity
  • Classified tech giants: (re)enter Facebook, Google and Amazon

Property market

  • Signs of life in the property market
  • Pent-up demand will trigger a long-needed increase in property transactions
  • Transactions and price growth vary across the UK
  • Regional residential property, volumes and pricing
  • London most severely hit by Brexit uncertainty
  • Rents rising as demand increases and supply falls
  • Pressure on estate agents, collapse in lettings agents
  • Rightmove cements its leadership position, Zoopla prepares for next round
  • Purplebricks: low tide, but stronger foundations?

Property advertising forecasts

  • Property spend, some signs of life in a static market
  • Property advertising expenditure forecasts

Online property marketplace

  • Key players in the UK online property portals market
  • Rightmove: big jump in the adoption of premium services
  • Rightmove growth substantially outperforms classified market
  • ZPG reignites battle with Rightmove as part of a classified aggregator model
  • OnTheMarket risks market irrelevance as it increases its investment
  • Zillow disrupts the “Digital 2.0” landscape through industry re-engineering

List of charts/tables

Consumer confidence & business confidence index and total weekly household expenditure (£)

Classified advertising expenditure, print and online, 2013-2018

Classified advertising expenditure by medium (£m)

Monthly UK property transactions (000) and year-on-year % change

Number of house hunters and supply of properties per branch in the UK

UK House prices, year-on-year growth and prices (%, £)

Change in residential sales volumes (absolute numbers)

Land Registry House Price Index (January 2015=100)

Change in residential transactions volumes in London (%)

Number of GB dwellings by tenure (000)

Rental price growth (January 2015=100)

Number of UK sales & letting agents versus Rightmove Number of UK sales agents and lettings agents compared to the number of property partners served by Rightmove

Top five property portals: audience metrics (Nov-19 versus Nov-18)

UK Monthly visitors to hybrid online agencies (000)

Purplebricks revenues (£m)

Property classified expenditure (£m)

Property classified advertising expenditure forecasts

Key players in the UK online property portals market

Rightmove: number of advertisers and average revenue per agent (ARPA)

Rightmove: revenue (£m) and year-on-year % change

Leads generated (millions) and % of leads concluding in sales/lets

ZPG: revenue (£m)

OnTheMarket: average revenue per agen

OnTheMarket revenue (£m)

Top six property portals: audience metrics (Nov-19)

Zillow revenues ($bn)