The owner of realestate.com.au is seeing signs the Australian property market is rebounding from the largest and fastest series of interest rate rises in decades – even if the hiking cycle isn’t completely over.
REA Group said on Friday that while new “buy” listings were down 12 per cent in the 12 months to June 30 and down nationally five per cent in July, listings in both Sydney and Melbourne were up nine per cent last month compared with a year earlier.
“You may recall that Sydney and Melbourne led us into the listing downturn last year, and they may be leading us out,” chief financial officer Janelle Hopkins told analysts on a conference call.
The real estate property company said house prices have been steadily increasing since February, rising 2.8 per cent after falling 4.1 per cent from March to December of last year.
Buyer inquiries also returned to growth in May and REA is feeling confident enough about its outlook it is raising average prices for listing by 13 per cent for real estate purchases and eight per cent for rentals.
“The fundamentals of the Australian property market remain healthy,” said chief executive Owen Wilson.
“We are continuing to see strong demand and a return to price growth, and this is converting to a more attractive market for sellers.
“We believe stabilisation of interest rates is within sight and expect this will lead to an increase in market activity,” Mr Wilson said, adding later that he didn’t think one or two more rate rises – which some economists are predicting – would shock the market.
“Part of it is, more listings drive more listings,” he said. In April and May there were potential vendors sitting on their hands because they couldn’t find a place to buy.
Near-record low unemployment, high wage growth and increasing migration should also further bolster demand, according to the company.
“All of that points to a strong market and whether we get another rate rise, I don’t think is going to impact it,” Mr Wilson said.
Overall REA Group posted a full-year net profit of $372 million, down nine per cent from a year ago, as expenses grew faster than revenue.
Revenue climbed one per cent to $1.18 billion while operating expenses were up seven per cent to $532 million.
E&P Capital analyst Entcho Raykovski saw the results as neutral for the company, saying the earnings were both broadly in line with market estimates and consistent with prior comments from management.
REA Group said 12.1 million people – 61 per cent of Australia’s adult population – visited realestate.com.au at least once each month during 2022/23.
Mr Wilson mentioned that REA Group had long been involved in using artificial intelligence and, like major shareholder News Corp, sees strong potential for the technology.
In June, realestate.com.au began leveraging ChatGPT to have the artificial intelligence chatbot write the top feature of each listing on the suggested property carousel.
“It’s early days, but we’re seen a seven per cent uptick in consumers engaging in suggested property as a result of this new feature,” he said.
