By David Winning
SYDNEY – REA Group Ltd. said Australia’s housing market retains several supports as households and investors face higher borrowing costs after the country’s central bank raised interest rates for the first time in more than a year. decade.
The REA said the Reserve Bank of Australia’s 25 basis point hike to 0.35% on Tuesday would be followed by further increases, but strong bank liquidity, record unemployment and higher immigration should support the real estate market.
Still, the real estate market faces further headwinds in the near term, with the federal election this month potentially weighing on listings, which were very strong a year ago. The REA said national residential listings fell 8% year on year in April, with steeper declines in Sydney and Melbourne, and it expects listings to be weaker in the three months to in June compared to 12 months earlier.
“Fourth quarter volume headwinds are expected to be more than offset by higher residential and commercial yields, supported by contract price increases and increased depth penetration, the benefit of strong March volumes carried forward in the fourth quarter and revenue growth from data and REA India,” REA said on Friday.
REA provided the outlook alongside its third-quarter performance, which was marked by a 27% rise in earnings before interest, tax, depreciation and amortization to AUD155 million ($109.5 million). Quarterly revenue increased 23% to A$278 million, while operating expenses increased 17% to A$122 million.
REA is 61% owned by News Corp., which also owns Dow Jones & Co., publisher of this newswire, and The Wall Street Journal.
Write to David Winning at [email protected]