REA Group Ltd (ASX: REA) is one of the highest quality businesses on the ASX.
If you've ever searched for a property to rent or buy, chances are you've come across its flagship portal realestate.com.
It's no secret that Australians love residential property.
Since the pandemic, house prices have been on the rise, with the average house price in Australia exceeding $1 million for the first time this year.
Earlier this week, the Australian Financial Review reported that property prices could rise even further over the next 12 months, driven by lower interest rates, supply shortages, and first home buyer incentives.
While the Reserve Bank of Australia (RBA) opted to leave the cash rate on hold at 3.60%, at least one more rate cut is predicted to be delivered over the coming year.
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Listing volume to remain flat
Yesterday, REA Group held its annual general meeting (AGM). Following this event, Macquarie Group Ltd (ASX: MQG) released an updated research note on the company.
Macquarie cited Proptrack's Listings Report for September 2025. The data showed that Australian residential listings volumes had declined 4% year over year in September. Sydney and Melbourne were flat and 4% higher, respectively.
Consistent with management's comments at the AGM, Macquarie is predicting 1% listings growth in FY26.
Rising competition
Earlier this year, US-based CoStar Group Inc (NASDAQ: CSGP) acquired REA Group's main rival, Domain.
This deal is expected to increase competitive pressure for REA Group.
Macquarie commented:
The key debate remains whether REA can manage competition from Domain under CoStar ownership, ie, REA has been investing in 3D mapping products… at the same time CoStar has looked to introduce similar capabilities. Any structural competitive changes remain to be seen, but may impact valuation, with REA trading on 43x 12m fwd P/E.
Is REA Group a buy today?
While REA Group shares are up 86% over the past 5 years, the stock has been relatively flat over the past year, rising just 2% at the time of writing.
Investors may be wondering whether this presents a good buying opportunity.
The broker has a neutral rating and price target of $255 on REA Group shares.
Given that REA Group shares are trading at $221 at the time of writing, this suggests 15% upside from here over the next 12 months, including capital growth and dividends.
Bell Potter is even more bullish on the stock, with a price target of $284.
