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REA Group revenue hit by interest rate uncertainty

REA Group, which owns Mortgage Choice and Smartline broker networks, has reported a 3% drop in its third-quarter revenue to $269 million, due to the challenging macroeconomic environment in Australia, which posted a 6% decline in revenue year-on-year. 

For the nine months ended March 31, the ASX-listed group’s revenue lifted 2% year-on-year to $887million, but EBITDA was down 5%.

“While interest rate uncertainty continued to impact the Australian market, conditions have improved with the stabilisation of house prices and more vendors returning to the market,” said Owen Wilson (pictured above), REA Group CEO. “The movement in listings reflects the strong listings environment in Q3 last year prior to the commencement of the interest rate increases.”

A 12% decline in Australian listings impacted the company’s performance last quarter, following a strong period of listings. Sydney and Melbourne were hit the hardest, falling 20% and 18%, respectively.

The group’s platform continued to be Australia’s number-one property site, visited by 11.9 million people each month, representing 59% of Australia’s adult population.

“Our strong audience metrics deliver unrivalled value for our customers and demonstrate the underlying strength of the property market,” Wilson said. “The launch of our realEstimate campaign, powered by PropTrack data, significantly increased active property owner tracks helping consumers understand their property value.”

REA Group’s Australian residential business revenues fell for the quarter, thanks to the 6% rise in the average national price, contribution from Premiere+, and increased depth penetration. This was more than offset, however, by the 12% drop in national listings and a significant negative impact from geographical mix. Rent revenue, meanwhile, was up year over year, with a 5% price rise and increased depth penetration partly offset by a 1% fall in rental listings.

Also seeing a decline over the quarter were Australian financial services revenues, as a result of reduced market activity in new home lending and lower average loan sizes, partly offset by growth in refinance activity.

Recruitment momentum continued, with 1,047 brokers at the end of third quarter, and the integration of Mortgage Choice is now largely complete.

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