Following yesterday’s Domain float, it’s a more than fair question given the prima facie similarities between the business models. Both are real estate listings firms. Both derive profits from selling property. Strategically, both are under attack from online disruptors.
There are two major difference between the businesses. First, real estate agencies are a more dependent upon selling prices given the commission basis. Second, Domain operates in a duopoly with REA and so has pricing power advantages over the highly fragmented real estate agent market. This makes realty listings a better play on upturns than real estate agents.
But the biggest similarity between the businesses is that both are highly cyclical. One need only glance at the chart of REA to see it:
