REA Group has announced an increase in first quarter revenue thanks to strong listings, however, the outlook remains mixed as the “heat” comes out of the property market.
Over the September quarter, REA Group generated revenue of $305 million, up 16 per cent compared to last year, and EBDITA (earnings before interest, taxes, depreciation and amortisation) of $174 million, an increase of 11 per cent.
REA Group Chief Executive Officer Owen Wilson said conditions were positive for listings to start the new financial year.
“This result demonstrates the strength of our business and reflects the significant traction of our premium products as sellers increasingly seek to differentiate their properties,” Mr Wilson said.
“The listings environment was positive in the first quarter, with supply and demand continuing to rebalance in the major metropolitan markets.”
National listings increased five per cent during the quarter, reflecting a number of state lockdowns in the prior period, with Sydney listings up five per cent and Melbourne increasing 12 per cent.
REA Group’s flagship site, realestate.com.au, maintained its leadership position, delivering an average monthly audience of 12.4 million.
Mr Wilson said the value of realestate.com.au’s audience is further enhanced when consumers engage more deeply with the platform.
“During the quarter we saw continued strong growth in active members and property owner tracks, demonstrating the depth of interaction our audience has with our personalised experiences,” he said.
“This strong engagement underpins the high quality of the leads we generate for our customers.”
The realestate.com.au site had 3.3 times more visits than the nearest competitor each month on average, and had a 22 per cent increase in active members compared to the prior year.
Overall, the listing portal saw two million average buyer inquiries each month.
The Australian Residential business delivered strong revenue growth for the quarter, with Buy revenue driven by a six per cent average national price rise from July 2022, contribution from Premiere Plus, increased depth and Premiere penetration, and five per cent growth in national listings.
Rent revenue saw a five per cent price rise and increased depth penetration partly offset by a one per cent decline in rental listings.
Commercial and developer revenue increased during the quarter. Growth in commercial revenues, driven by higher depth penetration and a price rise on 1 July, was partly offset by lower developer revenues, which were impacted by lower project commencements.
Despite strong numbers, REA Group said it would likely see conditions continue to slow down as interest rate rises weigh on demand.
The Australian residential property market has seen property prices and volumes decline following the rapid rise in interest rates, REA Group said.
Any further rate rises may see this continue, however, it is also clear the market is supported by positive fundamentals including record low unemployment, high household savings and increasing international migration, which should continue to underpin demand.
“We’ve seen the heat come out of the property market in recent months and while positive underlying fundamentals remain, we expect this moderation to persist as interest rates rise,” Mr Wilson said.
“REA is well positioned in this environment, and we will continue to invest in the growth of our platforms and adjacent businesses to further increase the value we provide to our customers and consumers.”
National residential buy listings in October were down 18 per cent compared to last year, with Sydney listings declining 31 per cent and Melbourne down 29 per cent, reflecting the rush of listings in the prior corresponding period as lockdowns ended.
Growth rates for the remainder of the year will reflect the strong prior period listings volumes.
Residential buy yield growth is anticipated to grow next year, driven by an average national 6 per cent price rise, the impact of Premiere Plus and continued growth in depth and Premiere penetration.