2019 CEO Survey: Owen Wilson, REA Group

Low interest rates will have a positive ripple effect on both consumer and business confidence, says REA’s Owen Wilson.

REA Group CEO Owen Wilson in Melbourne. Picture: David Geraghty

Every year The Australian’s John Durie asks some of the biggest names in Australian business five key questions about what’s coming in the year ahead.

Here, in his own words, is what REA Group chief executive Owen Wilson sees ahead in 2020.

You can read more from the CEO Survey.

How is your company affected by low-interest rates and what is needed to boost the economy?

A low-interest-rate environment is generally positive for REA Group as it leads to increased consumer confidence and increased spending. Further interest rate cuts in 2020 will have a positive ripple effect on both consumer confidence and spending – including transacting in property to fuel economic growth. There is also an opportunity to look at removing inefficient taxes such as stamp duty and moving towards a universal land tax. Increasing government expenditure in areas such as infrastructure projects in rural and regional Australia may also result in economic stimulus.

What is the impact of government regulations on your company, including those applying to the financial sector?

For REA Group, 2019 was a year of unprecedented market conditions on the back of a manufactured slow-down in the property market. Cooling measures introduced by APRA around interest-only loans, investor loans, and foreign investment loans, restricted the availability of finance. These changes led to fewer buyers in the housing market, falling house valuations and has ultimately contributed to lower levels of consumer confidence.

The banking royal commission further exacerbated these conditions. Mortgage volumes fell across the country, which impacted our home loans business. We have seen increased compliance and regulatory costs, as well as the time taken to process a home loan. That said, increased scrutiny in the financial services sector has positively benefitted REA. It has created an opportunity for REA to help consumers navigate this landscape while being viewed as a trusted, independent alternative to other players tarnished by the royal commission findings.

What percentage of company revenues are spent on research and development, and how is your company using technology to improve performance?

We invest over 7 per cent of revenues in new product development and innovation to ensure we are bringing to market experiences that empower our consumers and deliver more value to our customers. Automation of our business processes continues to enhance operating efficiencies, while investing in common technology, such as cloud infrastructure, is making it easier to manage our technology footprint. Our focus on investing in business capability platforms is allowing us to build products more efficiently by leveraging common building blocks right across the organisation globally.

What are the three major policy issues facing the country and what should be done about them?

● Innovation – Australia lags other countries in the encouragement of research and development. We need to provide a greater economic incentive for businesses to invest in R&D within Australia to ensure we can compete with other nations if we aspire to be viewed as a global leader in this area. The alternative is that we stifle innovation and productivity and run the risk of businesses, and the jobs they create, moving offshore to countries providing more attractive incentive opportunities.

● Talent – Australia’s talent shortage continues to be a big issue. While we are seeing increasing demands around digitisation across all industries, the skills gap around STEM, for example, is creating a real talent shortage. Not only are we not producing enough graduates with the right skills, our visa laws need to be reviewed to recognise that we are operating in a global talent market.

● Taxation – stamp duty is an inefficient tax which is only levied on the few people that purchase properties each year. A broader land tax for everyone makes more sense and would give state governments increased revenue certainty rather than riding the fluctuations of the housing market.

What are the major impediments to long-term growth facing your company and what can or is being done about them?

As the digital real estate industry evolves we continue to embrace new innovations and technologies to meet the changing needs of property owners, property seekers and real estate agents. An impediment to our long term growth could be the inability to hire specialised talent required to optimise technology advancements for our customers and consumers. This is why we have launched the “REA University” learning program and programs such as “Women in Tech” to foster the learning and development of our workforce.