Shares in REA Group Ltd (ASX: REA) fell more than 3% after the company announced both revenue and earnings had inched higher in the first quarter, bolstered by a "healthy" property market.
REA Group, which operates realestate.com.au, on Friday reported revenue of $429 million for the first quarter of FY26, up 4%, while operating EBITDA was $254 million, up 5%.
The company said it delivered "strong yield growth in a healthy property market", with customers continuing to adopt premium products.
REA said in its statement to the ASX:
The property market benefited from strong buyer demand and listing activity relative to historical averages, and continued house price growth. Overall revenue growth was moderated by lower listing volumes compared to the exceptionally high volumes recorded in the prior year.
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Listings down on last year
Overall residential listings in the first quarter fell 8% compared with the same quarter in the previous year. Listings in the Sydney market were 6% lower in the quarter, while Melbourne listings were 4% lower.
The company said that while listings were lower, price rises and the adoption of more premium products led to higher revenue.
Buy yield benefitted from a 7% average Premiere+ price rise, growth in add-on products such as Audience Maximiser and Luxe, higher subscription revenues and increased depth penetration. Rent revenue was driven by a 6% average price rise and growth in depth penetration, partly offset by a 2% decline in listings.
On the outlook, the company said it expected residential buy listing volumes to be broadly in line with the previous year's healthy market.
As the company said:
Australia's residential property market remains healthy, with strong buyer demand nationally and continued house price growth. Supply has improved in Melbourne and Sydney, which is supporting new listings activity, while limited stock in other cities is resulting in some vendors delaying the listing of the properties.
The company said while listings were down on the same quarter last year, that was due to the very strong performance in that quarter, and "comparables become easier as we progress through the remainder of the year''.
The group continues to target double-digit residential buy yield growth, including a 7% national average Premiere+ price rise reflecting the additional value delivered to customers and vendors.
REA Chief Executive Officer Cameron McIntyre said the company was well-positioned and had the financial strength to deliver the next generation of products.
He went on to say:
It's clear to me that we are well placed for continued growth, supported by a healthy property market and an exciting product pipeline.
Bell Potter recently reduced its target price on REA Group shares to $256, down from $284. The shares were changing hands for $209.66 on Friday morning, down 0.7%, after an early sharp sell-off that saw the shares decline by more than 3%.
REA Group is 61.4% owned by News Corporation (ASX: NWS).
