For years, online real estate portals have been some of the market’s favourite cash generators, built on the simple idea that if you want to buy or sell a home you go through one of a few dominant websites. That playbook is now under pressure. Over the past few months major property listing groups in Australia, the UK, Sweden and Germany have lost roughly a quarter of their market value as investors suddenly wonder whether people will soon ask an AI assistant to find their next home instead of trawling listings on a traditional portal.
The concern centres on how AI might change behaviour and business models at the same time. One camp argues that powerful chatbots could guide users directly to properties listed on agency or developer websites, bypassing the big marketplaces that currently charge hefty fees for exposure. Another view is that AI will actually help the incumbents. These platforms already attract huge audiences, control detailed listing and pricing data and are rolling AI into search tools, content creation and operations. They are also signing technology partnerships to make sure their listings feed into popular AI assistants rather than compete with them.
Even if AI does not topple these platforms the cost of staying ahead looks like it is rising. Major investment banks now expect property portals to lift spending on technology and traffic acquisition to make sure they remain the main gateway for searches, rather than letting AI push buyers elsewhere. That extra investment pressures profit margins that have long been a major part of their appeal. Sector valuations reflect this shift in mood, with online classifieds players trading around 15 times next year’s earnings, down from about 21 times only a few months ago and now close to the multiples of beaten-down software stocks that some analysts think have better growth prospects.
A similar pattern is emerging overseas. A large UK property portal recently cut its margin outlook and pledged heavier AI investment, which the market punished with a sharp share price fall. Domestically, some investors argue this margin squeeze story does not fully apply because local property platforms still have room to cut internal costs, which have roughly doubled over five years even while they invest in new tools. Others think management should use their strong balance sheets to pursue global expansion, especially after a failed bid for a leading UK peer whose value has since dropped about 30% below that final offer level.
On top of the AI question there are more traditional headwinds. Higher-for-longer interest rates are dampening housing activity and slightly reducing listing volumes, which feeds directly into revenue forecasts. Rising long-term bond yields also push up the discount rates analysts use, which reduces valuations on future earnings. Competitive pressure is intensifying as a well-funded international player takes control of the second-largest local portal and openly challenges the sustainability of big annual price rises, noting that listing numbers have barely moved in a decade even as revenues have tripled. At the same time the national competition regulator has quietly begun probing the sector, which adds a layer of regulatory uncertainty.
All of this leaves investors debating whether AI is a genuine existential risk or just the next in a series of overhyped threats. Previous scares, such as a large search engine’s attempt to disrupt portals via mapping services or global e-commerce pressure on retailers or new weight-loss drugs rattling healthcare stocks, ultimately faded and turned into buying opportunities. AI looks different though because it sits at the heart of how people discover and compare information online. If consumers and agents learn to use AI tools to search more efficiently and avoid paying for prominence, revenue growth for property portals could slow and pricing power may weaken even if the platforms remain central to the market.
The more nuanced view is that AI seems likely to reshape, not destroy, these businesses. It can improve user experience, automate back-office work and help reduce operating costs but it also enables smarter customers and new ways to find listings. That means the easy years of automatic price hikes and ever-expanding margins appear to be over. For online property giants the real challenge now is to use AI to streamline their own operations and deepen their value to users faster than AI erodes the need to pay them premium fees. Whether they manage that balancing act will determine if the recent share price slide is a blip or the start of a long reset.
