Latest news with #pricegouging
ABC News
19 hours ago
- Business
- ABC News
Online site gouging home sellers
Isabella Higgins: Buying a home in Australia is expensive, but selling a home is also getting more expensive. Australia's consumer watchdog is probing the digital real estate giant REA Group over price-gouging concerns on listing prices. The group is responsible for the popular website, with the watchdog saying this investigation comes after years of complaints. Nassim Khadem reports. Nassim Khadem: It now costs more to advertise a home for sale in Australia than almost anywhere else in the world. Consumer Pam Tindill sold her home in May. She discovered one major player, 32 billion dollar publicly listed REA Group, reaps most of the online advertising fees. Pam Tindill: We were quite surprised on how it was. We had no choice really to pay the price, no negotiating. And it's all dominated by one company. Nassim Khadem: According to REA Group's own figures, the site attracts more than 133 million average visits each month, almost four times more than rival domain. Tim McKibbin is the CEO of the Real Estate Institute of New South Wales. He says REA Group are very close to having a monopoly. Tim McKibbin: As REA became more and more dominant in the market, they've been able to ratchet their fees up. So in some cases you can be paying three or four thousand dollars or more for your classified ad. Nassim Khadem: Aaron Scott runs Bright Agent, an online portal that connects buyers with agents. He says REA's listing fees go up every year and are based on the suburb a property is sold in. Aaron Scott: Well essentially what you're seeing is a postcode tax. So are effectively saying if you're from a more affluent area, you have to pay more to list your property on their portal to get the right amount of visibility. Nassim Khadem: On top of the cost to list on the portal, REA Group charges real estate agents subscription fees that are also often passed on to the consumer. Agents like Jo Mooney, who sells homes in Melbourne's North East, doesn't feel agents and consumers are getting a fair go. Her subscription fee, which allows her to place a certain number of properties on the portal each month, is rising by 34% on July 1. Jo Mooney: It doesn't cost any more money for them to host the ad. It's cyberspace. It's a cloud. Nassim Khadem: An REA spokesman told ABC News listing a property online is not free. He said the company's pricing reflects a small percentage of the property sale and the average increase for listings this year is 7%. On subscription fees charged to agents, he said this is the first time they've changed in over a decade because of big investments to enhance the service. Tim McKibben says agents worry REA could use the wealth of data gathered about consumer habits to start charging them for leads. His fear is that agents could be wiped out altogether, although REA says that's not their strategy. Tim McKibbin: The industry remains concerned that that is their logical trajectory. And we do know that's possible because in the United States, there is one of the portals over there has done just that. Nassim Khadem: It could take up to a year before the ACCC hands down its findings. Isabella Higgins: Nassim Khadem reporting.
ABC News
a day ago
- Business
- ABC News
ACCC probes real estate giant REA Group over price gouging amid soaring costs
When consumer Pam Tindill sold her unit in May this year she was staggered by the high marketing costs. It now costs more to advertise a home for sale in Australia than almost anywhere else in the world. And, as Ms Tindill learned, one dominant player — REA group, the $32 billion publicly listed company, which is majority owned by the Murdoch-controlled News Corporation — reaps most of the online advertising fees. Ms Tindill says she paid her real estate agent almost $5,880 for marketing her unit in the north-east of Melbourne, of which a big chunk ($3,289) went to listing the property on REA's property website "We were quite surprised [by the cost to list the property on — we had no choice really to pay the price — no negotiating," Ms Tindill told ABC News. It's that listing cost that has Australia's consumer watchdog, the Australian Competition and Consumer Commission (ACCC), probing the digital real estate giant over price gouging concerns. The regulator has stepped in after years of complaints that REA Group — now the country's biggest real estate listings company — is using its dominant position to the detriment of consumers. While the cost of providing a home listing on the internet is very low, the Melbourne-headquartered company has established itself as the number one site to list on and, as such, it can hike up its listing prices nearly every year. But what has the industry most worried is REA Group's business model, which will now also come under the regulator's microscope. Former ACCC chair Allan Fels says REA Group's "price rises seem to be extraordinary at a time when housing affordability is a key problem for millions of Australians". If you have more information about this story please contact Nassim Khadem at or nassimkhadem@ He says while REA never was the subject of investigations during his time as ACCC chair, "they've become immensely powerful since then". The company has amassed power in Australia's highly lucrative real estate market — by not only investing heavily to become the number one portal to advertise a property for rent or sale, but by taking over a raft of other businesses that hold a wealth of data about consumer habits when it comes to buying and selling a home. Agents fear it won't be long until REA starts charging them fees for leads on buyers and sellers, and some even speculate that one day REA may operate as one mega real estate agency that could wipe out smaller independent agents altogether. While REA has said neither of those ambitions are part of its strategy, its rapid growth has real estate agents worried. For the past few years, REA Group has extended its lead over its main rival, Domain, which is majority-owned by Nine Entertainment. According to REA Group's own figures, the site attracts more than 133 million average visits — almost four times more visits than rival Domain — from 12.3 million users per month. Today more than 40,000 real estate professionals use REA's platform every month. Ms Tindill says during the sales campaign for her now sold home she was "very surprised" by how many buyer views came via compared to Domain. " was about 5,000 and Domain was 1,000 or so … I was quite shocked," she said. While both REA Group and its rival Domain increase the price to list a property each year, it is REA Group — which is estimated by some agents to control more than 80 per cent of the listing market — that's charging the biggest price hikes. The company charges real estate agents (who pass on the costs to consumers) in two main ways. First, it charges thousands of dollars for each property listing depending on what geographic area the property being sold is located in. Real estate agents ABC News has spoken to report that in 2009 the cost to list a home on was about $75. Now, some premium listings in Sydney cost more than $5,000. "Essentially what you're seeing [REA Group charge customers] is a postcode tax," according to Aaron Scott, who is the co-founder of bRight Agent — real estate comparison service that connects buyers with agents based on their commissions. "If you go back to the days of newspaper advertising … you didn't have to say what postcode you were from in order to dictate the price of being able to get an ad. CEO of the Real Estate Institute of NSW (REINSW) Tim McKibbin wrote to the ACCC about 18 months ago with evidence from agents and consumers of REA heavily increasing its fees. He argues that REA is getting "very close to having a monopoly" and, as REA becomes more dominant, it is able to charge higher prices. "They've got complete market saturation ... In some cases, you [a consumer] can be paying $3,000 or $4,000 or more for your classified ad," he said. But postcode affluence isn't the only factor that feeds into REA pricing. Some agents think the price set can also depend on other factors like sales volumes. Jo Mooney, director of Mooney & Estate Agents, an independent agency in the south-east of Melbourne, says listing prices have risen about 8 to 10 per cent a year in most years (except during the pandemic). Ms Mooney says prices between one suburb, and another can also differ depending on the volume of sales and whether it is classed as a residential zone. She gives the example of Melbourne's north-east suburbs of Cranbourne and Clyde. They are neighbouring suburbs with similar priced homes, but Ms Mooney says it is "111.66 per cent more expensive to advertise the Cranbourne home". "There is a road that divides Clyde and Cranbourne East [in Melbourne] and I have sat in homes on either side of those roads and had to explain to them [the sellers] why." She was told that Clyde is priced lower because it may still be incorrectly charged as farming land. Rowan Liew, Associate Director and Auctioneer at CHN Real Estate Group in Melbourne's east, says, agents have to pass on the listing cost charged by REA to consumers because it's a cost of doing business. But he concedes, "for an everyday mum and dad seller when you tell them the price of a premiere listing it does sound like a big figure to them". He said it was up to the ACCC to determine whether REA Group are price gouging. "I have noticed that the price has increased year by year," he said, adding that the cost to list a residential property in Melbourne's Doncaster area is now around $4,500. The second way REA Group makes its money is through subscription fees, which are charged to the agent on top of the listing cost. They are going up on July 1 — in some cases by almost 80 per cent, according to some agents. Ms Mooney received an email from REA Group that her monthly subscription was going up almost 34 per cent (from $599 to $799) on July 1. She says she previously would wear this cost but, with lower commission margins, now is forced to pass some of it onto the consumer. Ms Mooney is currently on a higher subscription tier, so she says the price hike isn't as severe as that faced by some other agents that may be on a lower tier. Ms Mooney also has an option to keep her subscription cost unchanged but, to do so, she must sign up to "add yet another expense to sellers" and agree to use REA's Audience Maximiser product, which she argues is effectively "a social media campaign for each property" that she can do for sellers at a lower cost. Mr Scott says many people selling their homes wouldn't know where their marketing money is going and "really how much is being siphoned off to REA Group". On May 27 REA made a statement to the ASX noting that it had received a Section 155 Notice, "requiring REA to provide information regarding certain subscription offerings". It said it was "co-operating fully with the ACCC and is unable to comment further for confidentiality reasons". That same week the ACCC issued a statement to ABC News saying it did not normally comment on ongoing investigations because they are confidential but that, in this case, it had made an exception. "Naturally, the ACCC is concerned to ensure there is strong competition in the important real estate sector," an ACCC spokesperson said, adding that "the investigation is at an early stage, and we're yet to form a view." Another issue is that have made it one of its conditions that you need a valid real estate agent licence to be able to list a property on its portal. "They [consumers] have to go through a real estate agent [to list their home for sale] and that real estate agent has to get a 12-month subscription," Mr Scott said. He adds that, while Domain also has a similar pricing structure, "it really pales in comparison to the market dominance of REA Group". ABC News sent REA Group questions about its pricing structure and its recent price hikes. An REA spokesman told ABC News most home owners prefer to sell their properties through a professional agent. He that while the company's growth rate differs year to year, when looking at it over a decade it is about 14 per cent per year across that period. REA's pricing for listings "reflects a small percentage of the total property sale transaction value based on the median house value" and he said the average price increase for listings this year was 7 per cent. "Listing property online is not free, in the same way that any advertising is not free," he said. He said in the past financial year REA invested over $200 million in innovation and new products and "continue to make large investments in our advertising products and the experience we offer to our audience of buyers, sellers and renters". Regarding subscription fees charged to real estate agents, REA's spokesman said until now its subscription fees have not changed in over a decade. He said REA subscriptions now include new tools and resources for agents to help them manage and market listings, access new leads, and promote and grow their businesses. The company had, for example, recently launched a product called Agency Marketplace within its subscriptions that can help agents win new business. "This is is now generating more valuable seller leads to our customers — we have increased the number of sellers connecting with agents more than 60 per cent over the past year," he said. Agents can also use a "basic subscription", which he said costs $249 per agency office per month. But agents point out the most basic listing gives them limited branding and lower visibility of the property in search results. It could take months to more than a year for the ACCC to hand down its investigation findings. In the meantime, REA Group is cementing its dominance and working out new ways it can grow its revenue from agents. In its latest financial results, REA Group reported an 18 per cent increase in revenue to $1.25 billion for the nine months to March, with quarterly revenue up 12 per cent to $374 million. Its Australian revenue jumped 11 per cent year-on-year to $340 million, or a 10 per cent lift excluding the acquisition of Realtair (a platform which allows real estate agents to manage the sales process). Ms Mooney says REA Group has amassed immense market power, not just through its listing portal, but by holding "large interests in each and every facet of the industry" and through every stage of the property listing-to-sale cycle. She says that makes the company "dangerous" and "very bloody powerful". It is a long list. REA Group also operates Australia's leading commercial property website — — as well as the leading website dedicated to share property, It also owns property research website, mortgage broking franchise Mortgage Choice, Australian property research group PropTrack, vendor paid advertising provider Campaign Agent, and digital platform Realtair. Internationally, REA Group also holds several other investments. Ms Mooney says Realtair is a platform used by many agents that gives REA a wealth of valuable information about home owners. "In the same way they now require buyers to create a profile account before they can email an enquiry to the agent about a property, there is a warning sign for the amount of data they are collecting across each of the associated businesses they own," she said. "Add to this ownership of Mortgage Choice — and they essentially hold data and information that allows them to predict who will do what at each stage of their journey." REA's spokesman told ABC News the company "have no plans to charge for leads". But one agent from a major franchise in Melbourne's east who spoke off the record (he was worried REA Group would punish him by raising costs if he spoke out against them) said very soon REA could start charging agents for seller leads. "You already get leads that say, 'would you like to look at this for free, then click here', and you get to see details of the seller for free," he explained. Another prominent agent in Melbourne's east, who also wanted to speak off record, said: "Speculation they might sell those leads back to agents has been a topic of discussion for about five to 10 years." Mr Scott also thinks "REA Group will take full advantage of its market position and that may well lead to charging agents for additional leads and listings". The REINSW's Mr McKibbin says agents are concerned that REA is gaining greater control over the real estate industry through its data collection. Professor Allan Fels says, while REA may have "close to monopoly power to raise their prices by excessive amounts", price gouging itself is not illegal. He calls on the ACCC to "run a ruler over REA to make sure there's no unlawful anti competitive behaviour". "There's also an issue that if a firm has got high market power in one market, for example real estate, it can set itself up to acquire and exploit market power in related markets." Mr Fels says, after all is said and done, there is a prospect that the ACCC's latest investigation will come to nothing. Will consumers be left worse off, paying higher prices? "The great weakness of Domain as a competitor, enables REA to jack up prices to very, very high levels, but it is not unlawful in this country," Fels notes.
Globe and Mail
25-05-2025
- Business
- Globe and Mail
In raging against companies raising prices, Trump is just like Biden
Gus Carlson is a U.S.-based columnist for The Globe and Mail. Popular culture is littered with references to the gullibility of the average consumer, from the apocryphal declaration that there's a sucker born every minute to the infamous movie line 'What the American public doesn't know is what makes them the American public.' To be sure, U.S. companies have grown rich by finding ways to sell people things they don't need at prices they can't afford. And they will look for every excuse to improve profit margins by raising prices. The latest case in point: U.S. President Donald Trump says big companies, particularly retailers such as Walmart and Amazon, but also manufacturers such as Ford and Mattel, are using tariffs as a convenient excuse to raise prices. In a shot across the bow, he said, 'I'll be watching,' then suggested they should 'eat' the tariffs rather than pass on any pain to consumers in the form of higher prices. Mr. Trump's detractors say he picked this fight and that any knock-on effects of his tariff policy are self-inflicted. In short, he has no one but himself to blame. His supporters counter that any price gouging and attendant whining simply make his strategic point – that tariffs are meant to encourage more U.S. manufacturing, more sourcing of materials and products domestically and, as a result, lower prices, more job creation and broader economic prosperity. Big retailers say that until U.S. manufacturing comes online at scale, they have no choice but to go offshore for goods to meet demand. Especially for companies such as Walmart WMT-N, price is everything; their business model is rooted in offering low-priced goods at high volumes to value-minded Americans. More businesses weigh tariff surcharges as trade wars drag on The gap between what Mr. Trump sees as a new era of homegrown prosperity and the current reality is a valley of death for consumers, especially those on tight budgets. Research from the Footwear Distributors and Retailers of America circulating on Capitol Hill tries to make the point. It shows how a theoretical pair of children's shoes made in China and sold in the U.S. for US$19 would cost US$24 post-tariff. With U.S. retailers ordering millions of pairs of shoes, that US$5 per pair adds up. The math is simple. Importers must pay the tariff, and the most obvious way to recoup the cost is to pass it along to consumers. Despite his widely controversial tariff policy, Mr. Trump is not the first U.S. president to wrestle with the corporate sector over consumer prices and inflation levels, which are consistently among the top issues among voters. Joe Biden claimed – and his vice-president, Kamala Harris, echoed in her 2024 presidential campaign messaging – that big U.S. retailers were price gouging, using high inflation as cover for price hikes. During Mr. Biden's term, inflation averaged about 5 per cent and was often much higher. The real question is this: Are tariffs really hurting companies to the point where they need to raise prices? Many economists suggest the impact of tariffs at the retail level won't really be felt until the summer or later in the second half of the year because most big retailers are still selling pre-tariff inventories. That point of view supports Mr. Trump's concern that companies are already looking to gouge consumers now by using tariffs as a convenient excuse to jack up prices. Most interesting in the latest standoff on pricing is that Mr. Trump and Mr. Biden, while at opposite ends of the spectrum on most issues, and while dealing with different root causes of consumer dissatisfaction, are aligned on how to deal with companies who raise prices unfairly. Mr. Trump is reported to be considering several tactics from Mr. Biden's policy toolbox – from having the Federal Trade Commission launch industry-wide investigations to more targeted probes into specific products and company profits and new legislation. Even price controls imposed by executive order are an option, harking back to Mr. Nixon's Economic Stabilization Act of 1970. Whether government intervention can counter the effects of tariffs, real or imagined, remains to be seen. In the meantime, consumers are caught in the middle, waiting to see if Mr. Trump's strategy of reigniting domestic manufacturing will catch fire quickly enough to offset tariff-based pricing pressures. Until then, the biggest opportunity in this land of opportunity remains duping the consumer.
Irish Times
19-05-2025
- Business
- Irish Times
Insurers should ‘show their sums' to customers to explain premium prices, says Green Party
Insurance companies should be forced to 'show their sums' and reveal what calculations are behind any price increases imposed on their customers, the Green Party has said. The party is calling for a new requirement that would make insurers display major factors used in calculating their quotations including any weightings that might be attached to the location of the customer, their claims history and the job they do, Insurers should also be required to publish the 'loss ratio' for each type of insurance package they offer, showing which ones incur the most claims. It said such requirements – if introduced – would increase transparency and give consumers more information that would go some way towards offsetting concerns over price gouging, and help improve competition, reducing premiums for business and consumers alike. READ MORE The call was made as part of its submission to the next Action Plan for Insurance Reform. [ Insurance reform: bringing stability and lower costs to contentious claims process Opens in new window ] The first plan focused on reducing legal costs and awards paid to injured parties and the Green Party wants the next reforms to radically boost transparency for consumers and would-be competitors. 'Ireland's high insurance premiums are a rip off. They keep struggling businesses on the brink of bankruptcy and pile pressure on hard-pressed households,' Cllr Michael Pidgeon, the party's finance spokesman, said. 'It's time for the insurance companies to show us their sums and reveal how they have calculated such high premiums. This will give consumers and businesses more clarity on what is behind their quote, and might help shame insurers into price reductions.' He said the party also had plans to increase competition in the market. ' An anonymous database of all insurance claims would give would-be competitors certainty, offering a chance to look under the hood of the Irish market. This would help increase competition and cut bills,' Mr Pidgeon said. 'The Government gave the insurance industry a lot of the reforms it wanted in the last action plan. Now it's time to demand fairer prices and transparency.' The Green Party submission also wants a requirement to report when customers are declined cover, to be included in the National Claims Information Database (NCID). and a new duty on insurers to ensure free access for people with disabilities to the most competitive insurance quotes, which may only be available otherwise on price comparison sites and not by phone.
