Australia’s online property conveyancing market faces a shake up after a start-up’s milestone transaction cleared a significant hurdle to bringing competition into the sector.
Sympli, a start-up half-owned by sharemarket operator ASX Ltd, conducted the first electronic conveyancing transaction from an operator other than the $2 billion ASX-listed PEXA, which is backed by the Commonwealth Bank.
PEXA – originally a venture between Australia’s largest banks and various state governments – allowed for the electronic settlement of property transactions for the first time with land registries more than a decade ago.
It also allowed for the online lodgement of registry instruments and other documents with land registries, such as remortgaging home loans with a different lender.
The key hurdle for introducing competition has been interoperability, which allows parties involved in settling a property transaction – lawyers, conveyancers and banks – to use any service provider, instead of having to use PEXA because of a lack of alternatives.
Sympli promises lower fees for homeowners, new home buyers or people refinancing their mortgage, with e-conveyancing moving more than $800 billion each year in Australia.
”It is critical that we keep this momentum towards full interoperability going full steam ahead, to ensure we meet the goal promised to industry of competition by 2025 at the latest,” said Sympli chief executive Philip Joyce. “Customers deserve the benefits of competition as soon as possible.”
The prospect of competition was one of the shadows on PEXA’s horizon when it debuted on the ASX as the biggest float of 2021 with a $3 billion valuation.
PEXA’s big selling point was its monopoly position as the paper-driven property conveyancing industry moved online. But the company was counting on overseas expansion into markets such as the UK to justify the multibillion-dollar valuation for a business that had yet to make a profit, despite generating $218 million revenue for the 2021 financial year.
PEXA generated $283 million of revenue last year with profit margins of more than 50 per cent – mostly in Australia, from the 88 per cent of conveyancing transactions that were conducted online.
It reported a loss of $21.8 million, but this included significant investment in overseas expansion. The company is expected to make a profit this financial year.
Morgan Stanley says that if Sympli manages to take market share from PEXA in the e-conveyancing market, it could become a billion-dollar business.
Meanwhile, Jarden Research pointed to the benefits of PEXA being able to stave off any competitive threat.
“Whilst further delays to interoperability could push back market share losses, weaker-than-expected penetration by Sympli into the Australian e-settlement market could present upside potential for both PEXA’s market share and revenue,” it said.
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Source: Thanks smh.com