REA must give agencies a 25% downgrade option from January

A clause in REA Group’s court-enforceable undertaking to the ACCC will give agencies the option to move at least 25 per cent of eligible sale listings and 25 per cent of eligible rental listings to a lower tier from 1 January 2027, putting more control over portal spend back into the hands of principals.

For agency principals, the significance is less about the number than where the decision will sit.

A portion of an agency’s listing inventory will no longer be able to remain committed to a higher advertising tier without the agency having an option to move it down.

That matters when the supplier is REA Group, operator of realestate.com.au, which the ACCC describes as Australia’s largest online residential property listing portal.

REA’s own FY26 figures put the scale into perspective. Realestate.com.au averaged 12.7 million visitors and 146.4 million visits each month during the financial year, while roughly half of its monthly audience used the platform exclusively. 

The contract change therefore lands in one of the most commercially important relationships many Australian agencies have.

What changes on 1 January

Under the undertaking, REA must not enter into or enforce a relevant Listing Tier Contract that fails to give an agency the choice to downgrade at least 25 per cent of its eligible sale listings and at least 25 per cent of its eligible rental listings to a lower tier.

The percentages are calculated separately and are based on eligible listings on the portal during the preceding calendar half-year. 

It is not a mandated 25 per cent discount.

REA is not being required to reduce its listing prices by a quarter, and agencies are not being forced to downgrade 25 per cent of their stock.

The change is about flexibility.

An agency can still choose premium exposure where it believes that investment is justified. But relevant contracts must leave it with a defined amount of room to make a different decision.

Why that could matter to the bottom line

Property campaigns do not all behave the same way.

A prestige listing competing for attention in a crowded market may warrant a higher level of exposure.

Another property may already have strong buyer enquiry, a substantial database behind it or limited competing stock.

Rental campaigns can be different again, particularly in markets where demand is already running well ahead of available supply.

The January provision gives principals more scope to decide whether a higher tier is warranted by the individual campaign, rather than having the answer determined solely by a broader agency commitment.

For high-volume businesses, that could cover a substantial number of listings.

And the financial context is significant.

REA’s Australian residential revenue rose 12 per cent to about $1.29 billion in FY26, with the company continuing to generate growth from listing yield and increased use of premium products. 

That does not make premium advertising inherently poor value.

It does make the ability to choose where that money is spent commercially important.

The wider restrictions have already changed

The 25 per cent requirement is only one part of the ACCC undertaking.

Other changes took effect when the undertaking commenced in September.

REA can no longer enter into new agreements, or enforce existing provisions, that require an agency to list or commit to listing all or the majority of its available residential properties on realestate.com.au as a condition of accessing listing services. 

The ACCC said most REA contracts had previously required agencies to list all properties for sale or lease on the platform.

Some arrangements also required or incentivised agencies to place properties into products carrying higher fees.

The regulator’s concern was that those provisions restricted agency choice and made it harder for competing listing services to compete for individual properties. 

There is an important distinction here.

Agencies were not prohibited from advertising a property on another portal as well.

The competition concern was that an agency already committed to buying REA listing services across all or most of its stock may have had less freedom to make a different decision for an individual campaign.

That is why the impact of the undertaking is best understood at listing level.

Sponsorship is part of the reset

The undertaking also reaches into commercial relationships that extend beyond ordinary listing fees.

REA cannot make certain sponsorship funding conditional on an agency committing to list or upgrade all, or the majority, of its relevant properties at a particular tier during a future period.

The arrangements covered can include funding for training, education, marketing and events. 

REA can still sponsor agencies, networks and industry initiatives.

The difference is that sponsorship cannot be tied to the types of broad future listing or upgrade commitments caught by the undertaking.

For larger groups and networks, that is not a minor provision.

Portal relationships can extend well beyond the cost of an individual listing, and principals negotiating those broader arrangements now have a clearer separation between sponsorship support and future listing commitments.

What this does not change

Realestate.com.au is not suddenly becoming less important to Australian property marketing.

Its audience remains enormous.

REA says nine in 10 Australians who use a residential property website visit realestate.com.au in an average month.

Nor does the undertaking remove Premiere+, Luxe or other premium advertising products.

REA can continue developing, pricing and selling higher-tier products, and agencies and vendors can continue deciding those products provide value.

What changes is the contractual freedom around those decisions.

The strongest premium product should be able to win a campaign because the agency and vendor believe it is the right product for that property.

The January rule creates more space for that judgement.

What principals should check now

Agencies heading into 2027 contract discussions should know more than the headline figure.

They need to understand which listings are considered eligible, what their previous half-year volumes mean for the calculation and which lower tiers will actually be available.

They should also establish how a downgrade is exercised and who within the business will make that decision.

For agencies using vendor-paid advertising, there is another question worth asking.

Does the internal marketing process allow the portal recommendation to be made property by property, or has the agency’s broader commercial agreement effectively determined the recommendation before the appraisal begins?

That is where the new flexibility could become useful.

Not every agency will use the full 25 per cent.

Some may use very little of it.

Others may find that it changes the way they structure portal spend across hundreds or thousands of campaigns.

The point is that the option must be there.

The ACCC’s intervention stops short of a finding against REA

The legal position also needs to be kept clear.

The ACCC was concerned that provisions in REA’s contracts may have contravened section 45 of the Competition and Consumer Act, which prohibits anti-competitive agreements.

REA does not share the regulator’s concerns, but agreed to the court-enforceable undertaking to resolve the matter.

There has been no court finding that REA breached competition law. 

The undertaking operates for three years and also requires REA to implement a competition law compliance program.

The bigger change is who gets to decide

REA has spent decades building an audience that agents and vendors want access to.

That commercial strength is not being removed.

What is changing is the amount of discretion an agency must retain when deciding how much exposure an individual property requires.

For years, much of the portal conversation has centred on which product delivers the greatest visibility.

From 2027, principals have another question to put beside it:

Does this particular property need the higher tier at all?

For at least 25 per cent of eligible sale listings and 25 per cent of eligible rental listings under relevant contracts, agencies must have the ability to answer that question for themselves.

For businesses spending heavily on portal advertising, that is a contract change worth understanding before the next agreement is signed.