Digital property company REA Group says the residential property market remains healthy, with strong buyer demand nationally and continued house price growth.
Delivering his first quarterly result, REA chief executive Cameron McIntyre flagged that the company’s focus continued to be offering the best value in the market despite the arrival of US group CoStar.
“REA is well positioned with the financial strength, momentum and expertise to deliver the next generation of products and experiences,” he said, flagging a commitment to new technology as the AI revolution sweeps the world.
“It’s a net net opportunity but we need to continue to proceed with a great deal of thoughtfulness and consideration. We do, as a business, need to press forward and leverage the technology that’s emerging to benefit our customers and consumers overall.”
REA said supply of stock had improved in Melbourne and Sydney, which was supporting strong new listings activity, while limited stock in other cities is resulting in some vendors delaying listing.
It expects national residential listing volumes to be broadly in line with last year’s healthy market. While listings declined in the first quarter, as expected due to very strong prior year listings, REA said comparables would become easier over the rest of the year.
October listing volumes were down 3 per cent year-on-year, with Melbourne up 2 per cent and Sydney increasing by 6 per cent.
REA is targeting double-digit residential yield growth, including a 7 per cent national average Premiere+ price rise, which it said reflected the value delivered to agents and home sellers.
The company’s flagship realestate.com.au is continuing to grow its lead over rival Domain, that is now owned by US giant CoStar.
About 12.6 million people visited each month, on average, with 6.7 million people exclusively using realestate.com.au.
Over the quarter, REA opened the gap on Domain by another 14 per cent.
In October, REA Group acquired a 61.5 per cent controlling stake in Planitar Inc, the maker of iGUIDE, for $55m.
It is a proprietary camera and software platform that uses AI to produce immersive 3D virtual tours.
REA is targeting positive operating jaws with core operating expenses expected to increase by mid single-digits, as it deals with the consolidation of the prop-tech company and, separately, selling off PropTiger and closing Housing Edge in India.
The company, majority owned by News Corporation, publisher of The Australian, reported a lift in its core operations for the September quarter. Revenue was up by 4 per cent to $429m year-on-year and there was a 5 per cent lift in earnings before interest, taxes, depreciation, and amortisation, excluding associates, of $254m.
REA said it delivered strong yield growth in a healthy property market, as customers continued to adopt premium products.
It said the property market benefited from strong buyer demand and listing activity relative to historical averages, and continued house price growth.
Residential revenue increased 4 per cent year-on-year.
Buy revenue growth was driven by a 13 per cent increase in yield, partially offset by an 8 per cent decline in national listings.
The financial services unit had a strong quarter, benefiting from a 16 per cent increase in settlements partly offset by increased broker payout rates.
