REA Group has posted strong third-quarter earnings, buoyed by a booming property market as listings continued their post-COVID-19 recovery.
In a statement released to the Australian Securities Exchange (ASX), REA Group reported revenue of $278 million for the three months ending March 31, as earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 23 per cent to $155 million.
The company capitalised on a strong property market, with listings up 8 per cent across the country for the quarter, led by Melbourne, which was up 14 per cent and Sydney up 6 per cent.
REA Group noted that April listings were down 8 per cent across the country annually due to the Easter and ANZAC Day holiday period, with Sydney down 19 per cent and Melbourne 18 per cent lower.
REA Group Chief Executive Officer Owen Wilson said confidence remained high in the Australian property market, which had led to record transactions.
“Australians transacted property at pace during the quarter as continued high demand gave sellers the confidence to bring their properties to market,” Mr Wilson said.
“These conditions, combined with record take up of our premium products, contributed to our very strong result.
“We also continued to see excellent growth in our strategically important financial services, data and Indian businesses.”
REA Group’s flagship site, realestate.com.au, further consolidated its leadership position, delivering a record average monthly audience in the third quarter.
Realestate.com.au grew to be Australia’s sixth largest online brand during the quarter.
“Having the largest and most engaged audience delivers great value to our customers,” Mr Wilson said.
“This is key to our success, and we were pleased to realise a strong increase in active members during the quarter, with greater uptake of our property tracking and valuation tools.”
REA Group said the Australian residential business delivered strong revenue growth for the quarter thanks to more listings, the price rise from July 2021, increased depth and Premiere penetration and continued growth in add-on products.
Rental revenue continued to benefit from increased depth penetration and the price rise, however, this was more than offset by a decline in rental listings.
Commercial and developer revenue was broadly flat, while commercial revenues increased due to higher depth volumes and price rise, however this was offset by lower developer revenues, which were impacted by the continued decline in project commencements.
According to REA Group, the fundamentals of the residential property market remain positive, with an increasingly healthy balance between supply of properties and demand from buyers.
While further interest rate rises are expected, strong bank liquidity, record low unemployment and increased immigration should underpin the Australian property market.
The Group said it expected national listings to fall in the fourth quarter on an annual basis, reflecting a very strong prior listing period and potential impacts from the Federal Election.
As with residential listings, they expect financial services settlements growth to slow in the fourth quarter and the current industry trend of increased mortgage run-off rates to negatively impact the valuation of future trail commissions at year end.
Mr Wilson said the outlook for the property market remained positive thanks to a strong economy which would help offset any price reductions.
“The Australian property market is very healthy,” he said.
“While we are seeing housing price moderation in some areas, the strong economic fundamentals will continue to support robust conditions beyond this quarter.
“We are excited by the significant growth opportunities throughout our business and are well positioned to deliver another strong full year result.”