After a period of tight listings there are signs that vendors are looking to capitalise on more normal conditions.
While current listing volumes remain subdued and are still impacted by the uncertain interest rate environment, the company expects that as the market approaches the end of the Reserve Bank’s hikes, more vendors will bring properties to market.
The company was impacted locally by the still constrained market but was protected by agents taking up its premium products, as well as surging growth of its Indian operations, over the last period.
In the nine months to the end of March revenue lifted by 2 per cent to $887m and earnings before interest, taxes, depreciation, and amortisation dipped by 5 per cent to $495m.
Revenue in the third quarter declined by 3 per cent to $269m, due to the challenging macroeconomic environment in Australia, but there was strong revenue growth in India.
“While interest rate uncertainty continued to impact the Australian property market, conditions have improved with the stabilisation of house prices and more vendors returning to the market,“ REA Group chief executive Owen Wilson said.
“The movement in listings reflects the strong listings environment in the third quarter of last year prior to the commencement of the interest rate increases,” he said.
Mr Wilson said the strength of REA’s premium product offering and audience continued to support revenues, and the Indian business delivered exceptional growth.
While the company flagged higher costs in some areas it said it was keeping a lid on them, and pointed to the bounce back in the local residential market.
“Lack of supply and interest rate uncertainty have caused some vendors to sit on the sidelines, but we expect this to improve given strong demand, positive price sentiment and increasing confidence that we are near the peak of the rate cycle,” Mr Wilson said.
REA was investing in products and experiences to drive value for its customers and was “well positioned” for future growth, he added.
Core Australian revenue declined 6 per cent year-on-year, reflecting subdued market conditions and strong prior period listings. National listings declined 12 per cent during the quarter, with Sydney down 20 per cent and Melbourne declining by 18 per cent.
The Australian residential business saw revenues decline for the quarter, which was driven by the tougher listing environment at the beginning of the year. But commercial and developer revenue increased during the quarter.
Momentum continued for REA India with revenue up 63 per cent year on year and the property advertising business and associated products there are growing rapidly.
In April, national residential new listings were down 24 per cent year-on-year, with Sydney listings decreasing by one quarter and Melbourne down 22 per cent. Year-on-year growth rates for this quarter will reflect the strong period last year.
The company is expecting its premiere products to grow strongly, partly on the back of price rises, while core Australian operating costs are expected to increase low single-digits in this financial year.
REA said planned investment in India means losses are expected to widen as it spends to lock in its position, resulting in total operating costs increasing mid single-digits.