REA Group Limited (ASX: REA) has the unquestionable leading property website in Australia in realestate.com.au, but a number of competitors are nipping at its heels.
Domain – the resurgent Fairfax Media Limited (ASX: FXJ) website has continued to improve, and the results show as earnings before interest, tax, depreciation and amortisation (EBITDA) margins, revenues and other metrics grow.
Other players are entering the market too and pose a strong challenge for REA. Rent.com.au Ltd (ASX: RNT) has the second-highest average time spent on its website behind REA's premier site – as the chart below shows.
Source: Rent.com.au & AC Nielsen
Carsales.com Ltd (ASX: CAR) has the number 4 leading property site according to AC Nielsen's June 2016 Market Intelligence Report. Considering the site has not been around for long, achieving the number 4 position is quite astonishing.
REIWA.com.au is the Real Estate institute of Western Australia – and it too provides similar services such as browsing for sale and rental properties.
Realcommercial.com.au is a REA property website, while Allhomes.com.au is owned by Domain. Realestateview.com.au is owned by the state real estate institutes.
One factor that continues to hinder REA Group is that real estate agents fear its dominance – as they should – given the company's ability to push through price rises as the market leader with a huge competitive advantage.
As a result, it is in the agents' interests to have a number of competitors to realestate.com.au.
Foolish takeaway
REA Group is likely to leverage its existing strength to maintain its leadership in the sector. But the company needs to keep a close eye on competitors focusing on niche positions such as Rent.com.au – which could erode REA Group's overall competitive advantage.
