About the report
eConveyancing allows parties in a property transaction to electronically prepare and lodge their property dealings with title registries, transmit settlement funds, and pay relevant taxes and duties. Around 3.7 million eConveyancing transactions were processed nationally in the financial year ending June 2023.
The costs of eConveyancing are borne by buyers and sellers of property, including first home buyers. Effective competition in the eConveyancing market will ensure the costs of transactions are not higher than necessary and there is a choice of provider for users of these services.
The NSW Productivity and Equality Commission conducted a market study which examined the effectiveness of competition in the eConveyancing market; the best ways of promoting long-term competition; and the resources, governance, and regulatory structures needed to ensure a sustainable and long-term competitive market.
In preparing the market study, we consulted with the NSW Office of the Registrar General; Australian Registrars’ National Electronic Conveyancing Council (ARNECC) members; Commonwealth, and state and territory treasuries; Electronic Lodgment Network Operators (ELNOs); industry peak bodies; regulators; and competition experts.
Our report makes 18 recommendations to ministers, regulators, and policymakers with responsibility for competition and eConveyancing. These have a short-term focus on progressing the interoperability reform, and a longer-term focus on developing an effective and appropriately resourced regulatory framework.
Key findings
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The current eConveyancing market is not effectively competitive which is demonstrated by the high levels of market concentration and the incumbent ELNO earning high profits. Competition is beneficial to both the eConveyancing market and other related markets, such as the market for mortgages and refinancing. Competition results in lower prices, better quality, increased innovation, greater choice of product offerings, and increased prosperity.
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In the longer term, a lack of competition in the eConveyancing market could have implications in adjacent markets, with the potential for an ELNO to use its market power and unfair competitive advantage to move into the related sectors such as banking, conveyancing, and property data.
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The eConveyancing market can support competition but there are material barriers to entry:
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The market for eConveyancing exhibits strong network effects. All parties must be with the same ELNO for the transaction to go through – this entrenches the market power of the incumbent, making it difficult for competitors to gain a sustainable market share.
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The current policy framework creates barriers to entry. For example, the minimum service requirement may dampen market entry as it imposes an all-or-nothing requirement on prospective entrants.
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The incumbent has benefited from ‘first mover’ advantage. For example, switching costs—like the money and time expended to establish an account with a new ELNO and re-train staff on a new system—may discourage subscribers from changing platforms, which will benefit the incumbent ELNO.
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The eConveyancing market needs a fit-for-purpose policy and regulatory framework that differs from the current framework for the benefits of competition to be realised.
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The current regulator, ARNECC, faces challenges with its structure and resourcing that constrain its ability to deal with issues both today and in the future. Further, it lacks the necessary financial settlement and competition expertise to oversee the market as a whole.
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The Australian Competition and Consumer Commission, as Australia’s competition regulator, is best placed to lead the ongoing market oversight and monitoring of the eConveyancing market in Australia.
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