Is the REA Group Limited (ASX: REA) share price a buy? It has been a strong performer since 23 March 2020. It’s an interesting question now that property activity is returning.
The REA Group share price has risen by around 50% since 23 March 2020. It’s now only down by 15% from 21 February 2020. That’s some recovery considering how much the landscape had been hit for REA Group.
Property listings were down significantly a few weeks ago. In April national residential listings were down 33% with Sydney listings down 18% and Melbourne listings down 24%.
Obviously REA Group is quite reliant on volume to make up a lot of its profit and cashflow. With some restrictions being lifted in different states, property listings, auctions and open houses can start to go back to normal. A return of property listings is good for the REA Group share price.
I’m not sure how many people will be wanting to list their properties in this environment with buyers agents reporting that house prices in some areas have already dropped 10% compared to pre-coronavirus prices. There will always be some sales going on due to personal circumstances, which should keep things ticking over.
Is the REA Group share price a buy?
I think it’ll be very interesting to see what happens when the bank mortgage holidays stop and jobkeeper ends. Will there be lots of forced sellers coming onto the market? More volume would be good news for earnings and the REA Group share price. I definitely prefer it to Domain Holdings Australia Ltd (ASX: DHG) as it comes with potential international growth.
Lower interest rates do justify higher asset prices, but I’m not sure if a share price of around $100 is worth buying in the shorter-term. Patience may be the way to go for now. It certainly isn’t cheap considering the earnings hit in 2020.
Instead of REA Group I think there are other shares that could be better buys today.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.