REA Group (ASX:REA) Dips Despite Strong Q3 FY25 Update; asx 200 Real Estate Sector Movement

May 09, 2025 03:03 PM AEST | By Team Kalkine Media

REA Group (ASX:REA) Dips Despite Strong Q3 FY25 Update; asx 200 Real Estate Sector Movement — Image source: Shutterstock

Australian Segment Drives Performance

During the quarter ended March, REA Group reported higher revenue from its Australian operations. The increase was attributed to stronger pricing across its property listing products. Residential revenue rose due to higher yield across premium products, which were enhanced by broader usage of listing upgrades and add-ons. The acquisition of Realtair contributed additional gains, supplementing core operations.

National new residential listings remained steady, with Sydney experiencing increased activity while Melbourne faced a moderate decline. The flat listings landscape did not deter the company from improving its earnings due to favourable pricing structures. Rent segment performance was supported by increases in average prices and listing volumes.

Traffic metrics showed high engagement, with realestate.com.au achieving a dominant position in the Australian digital real estate space. This was underpinned by consistent monthly visits and a strong base of exclusive users.

Revenue Streams Remain Diversified

Beyond core residential services, REA Group also reported flat performance in other revenue streams. Growth in the CampaignAgent unit helped offset declines in programmatic display and PropTrack-related earnings. The financial services segment expanded due to an uptick in settlements.

The Indian business, under the REA India umbrella, delivered strong revenue growth through adjacency services. These offerings, which include value-added features and tools on the Housing Edge platform, contributed significantly to the improved figures. However, PropTiger and Housing core services remained under pressure due to increased market competition and volume-related challenges.

Operating Expenses Rise Alongside Revenue

Operating costs increased in both the Australian and Indian markets. The rise in expenditure was driven by continued investment in platforms, product innovation, and operational scalability. Despite these increases, operating earnings still reflected a healthy margin due to proportional growth in revenue.

Free cash flow also saw improvement, driven by enhanced earnings before interest, taxes, depreciation, and amortisation. This positioned the company to continue focusing on operational enhancements while supporting its longer-term digital platform strategy.

Market Conditions and Sector Context

REA Group noted that broader economic factors, including employment conditions and shifts in monetary policy, had an impact on property market sentiment. Buyer demand reportedly increased after recent interest rate adjustments, and stock availability in the residential market remained above historical levels.

Competitive dynamics in the Australian market were highlighted, particularly with Domain Holdings Australia Ltd (ASX:DHG) receiving strategic direction under new ownership. This adds a layer of complexity within the digital real estate space.

Despite current market movements, REA Group stated that it remains focused on achieving higher margins in FY25 through operational discipline and enhanced product value.

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