Highlights

• First-quarter FY27 Revenue reached A$450 million, up 11 per cent, or 8 per cent excluding acquisitions.

• Combined Sydney and Melbourne listings fell 16 per cent in the September quarter, while buyer enquiries fell 33 per cent.

• FY26 revenue rose 7 per cent to A$1,793 million, and core net profit after tax rose 15 per cent to A$650.5 million.

• FY27 guidance was kept unchanged, with the average Premiere+ price rise for the year at 8 per cent.

Why is REA Group (ASX:REA) still growing revenue when fewer homes are being listed for sale? Pricing is doing most of the work. In the September quarter, the operator of realestate.com.au lifted revenue by 11 per cent even though national new Buy listings fell 2 per cent. Higher prices for premium listing products, along with add-on sales, more than made up for lower volumes. The question is how long that can last as Sydney and Melbourne listings fall and buyer Demand softens.

What REA Group does

REA runs Australia's largest property portal, realestate.com.au, along with realcommercial.com.au and related services. Most of its revenue comes from real estate agents and vendors who pay to advertise homes, especially through tiered "depth" products such as Premiere+. Those products give listings more prominence and are repriced each year.

The Business also earns revenue from commercial property and new developments, a Mortgage broking arm (financial services), and data and software services. REA is majority-owned by News Corp. It has recently exited most of its Asian businesses.

FY26: core profit up, statutory profit down

For the year to 30 June 2026, REA reported revenue of A$1,793 million, up 7 per cent. Core EBITDA, excluding associates, rose 12 per cent to A$1,088 million, and core net profit after tax rose 15 per cent to A$650.5 million. Core Earnings Per Share were A$4.93.

Australian revenue grew 11 per cent to A$1,712 million. Residential revenue rose 12 per cent to A$1,290 million, Commercial and New Homes grew 9 per cent to A$238 million, and Financial Services rose 11 per cent to A$114 million. Group operating expenses were flat at A$705 million, and the Australian Margin was about 66 per cent.

Statutory profit moved the other way. Reported NPAT attributable to shareholders fell to A$551.6 million from A$677.9 million, a decline of about 19 per cent. The main cause was an Impairment of about A$111 million against REA India, which was classified as a discontinued operation held for sale at 30 June. The comparison was also distorted by a A$117 million impairment Reversal booked in FY25 when REA sold its stake in PropertyGuru. On a continuing basis, excluding India, reported NPAT was A$673.0 million.

REA declared a fully franked final Dividend of A$1.73 a share, taking the full-year payout to A$2.97, up 20 per cent. It ended the year with A$366 million in cash and no drawn external debt, and had a A$200 million on-market share buy-back under way.

The listings squeeze

Listings are the main concern for the market. National Buy listings were flat in FY26, better than REA's earlier guidance for a modest decline.

In the September quarter, combined Sydney and Melbourne listings fell 16 per cent, while Brisbane, Perth and Adelaide together rose 17 per cent. Because listings in the two largest cities usually earn higher prices, the shift weighed on yield. Controllable Buy Yield rose 14 per cent, but total Buy yield increased only 8 per cent after geographic mix. October listings were down 13 per cent year on year, or 8 per cent after adjusting for one fewer working day.

Demand indicators also weakened. REA reported that buyer enquiries fell 33 per cent to an average of 1.9 million a month, and seller leads fell 9 per cent. Chief executive Cameron McIntyre warned that tax changes and higher borrowing costs are expected to weigh on buyer demand.

First-quarter FY27 numbers

Quarterly revenue reached A$450 million, up 11 per cent, or 8 per cent excluding acquisitions. EBITDA, excluding associates, rose 12 per cent to A$294 million, and the margin edged up to 65.3 per cent. Operating costs rose 9 per cent, but only 2 per cent excluding acquisitions.

REA kept its FY27 outlook unchanged. It expects national new Buy listings to be flat to down low single digits for the year, residential Buy yield to grow by low double digits (excluding geographic mix), and operating costs to rise mid to high single digits including acquisitions. The average Premiere+ price rise for FY27 is 8 per cent.

The sale of Housing.com to Aurum PropTech completed on 29 September 2026, with REA keeping a 24.9 per cent stake in Aurum. REA has also agreed to take a 35 per cent stake in Distilled, owner of Ireland's Daft.ie, with completion expected by the end of 2026.

Competition and pricing power

REA operates a major Australian property listings and Advertising platform with a substantial online audience. Its main competitor, Domain, is now owned by US group CoStar.

At its 23 October investor day, REA said it would "continue to price to our value over time" and pointed to a ten-year yield compound annual growth rate of 14 per cent. Agents and vendors who face lower volumes could push back harder on price rises, particularly if a well-funded competitor keeps prices lower.

Risks and what to watch

The key risk is a deeper or longer listings downturn in Sydney and Melbourne. Industry reports say at least one hedge fund has taken a short position on the view that new listings could fall sharply in 2027. That is a market view, not a forecast from REA.

Other uncertainties include whether vendors keep taking up premium products as markets slow, competition from Domain under CoStar, and the contribution of new investments such as Distilled. Investors will also watch monthly listings data, the half-year result expected in February 2027, and whether REA holds its FY27 guidance as Interest Rate and tax settings change.