Property agents threaten SouFun boycott over rising fees

Four real estate agencies in Shenzhen, which account for more than 50 per cent of the city's brokerage market, have threatened to boycott SouFun Holdings in a bid to force the property website to cut its listing charges by half.

The agencies said the fees charged by SouFun for listing their properties kept rising at a time when the market had been weakening.

The boycott move came after similar alliances formed in other mainland cities including Shanghai, Beijing and Hangzhou in the past few months.

Conflicts between the agencies and SouFun intensified late last year after the mainland's biggest real estate property information provider entered the broking industry by encouraging individual brokers to conclude transactions through its platform.

"That changes our relationship from partners to rivals," said Alan Cheng, the managing director of Centaline Property Agency's Shenzhen branch.

Centaline has formed an alliance with Midland Realty, Zhonglian Real Estate and Shihua Real Estate.

The cooperation between real estate agencies and SouFun began a few years ago when the website provided a platform for brokers to list second-hand properties to attract buyers.

Samuel Kong, the managing director of Midland Realty's Shenzhen branch, said the cost of listing property information on websites increased about 15 to 20 per cent per year in the past two years as SouFun kept raising its fees.

SouFun kept revising its listing application program and increasing fees, while the number of housing transactions in the city continued to fall, Kong said.

The housing market is suffering a nationwide slowdown, plagued by tightened lending policies including a credit squeeze and home purchase restrictions.

Home prices dropped in 35 cities last month from the previous month, compared with only eight in April, according to data on 70 leading cities released by the National Bureau of Statistics.

Centaline and its alliance partners want SouFun to cut the listing rate by 50 per cent and to stop changing its listing application format as a way to raise fees.

They also demand that SouFun refrain from charging additional fees for using its wireless smartphone services.

They threatened to follow agents in other cities in stopping listings on SouFun if their demands are not met.

Conflicts first arose in Shanghai and Beijing in March when listing providers began charging higher fees. The issue flared up last month when the agencies in cities including Hangzhou and Chongqing began suspending their listings on the websites of the providers including SouFun.

SouFun had earlier announced it would offer 40 per cent discounts on fees nationwide from this month.

Cheng said SouFun's new services encouraged individual brokers to look for buyers through its platform.

"But those individuals are mainly our staff. We train them and provide them basic salaries. But they sell flats through SouFun without informing us," said Cheng, adding SouFun was encouraging malpractices in the industry.

He also said errant staff would be sacked.