REA Group reported net profit after tax of $519.3 million for the year to 30 June, a 22% decline from the prior year. Management said listings were stronger than expected in the fourth quarter, yet the group still forecasts national buy listings in FY27 to be flat to down low single-digits. July listings were 2% lower than a year earlier, which REA Group noted aligns with its eight-year average. The company expects Australian operating costs excluding acquisitions to rise by mid single-digits in FY27, and by mid to high single-digits including M&A from a $609 million FY26 base.
Executives gave a relatively upbeat picture of the pressured residential market, arguing REA Group’s products remain resilient as conditions soften. Combined listings in Melbourne and Sydney fell 16%, but Brisbane, Perth and Adelaide recorded a 13% increase, partly offsetting the weakness in the two largest cities.
Rising investor activity has been linked to recent changes to negative gearing rules and capital gains tax discounts that are prompting more selling. REA Group shares closed 3.4% higher at $172.03, with investors comfortable with its ability to generate earnings even while home prices ease.
REA Group has also had to contend with wider market jitters about artificial intelligence disrupting software-based business models, a shock that some analysts labelled a SaaSpocalypse. Concerns that AI tools could undercut traditional software platforms hit sentiment hard, helping drive the stock down more than 30% over the year at one point and as much as 50% at its lowest.
Those worries have collided with a weakening housing cycle driven by three interest rate rises and tax changes that are discouraging some property investors. Against that backdrop, REA Group surprised parts of the market with a better-than-expected 15% profit rise to $650 million in a more recent period and a 20% lift in its dividend, helping the stock recover some ground with another 3.4% gain on Thursday.
Leadership change has added another layer of complexity as REA Group navigates these overlapping pressures. The new chief executive stepped in at the News Corp-controlled platform in November, taking over just as the company’s share price hovered near record highs and national house prices continued climbing.
Over the following nine months, the group confronted three simultaneous headwinds. The AI-driven sell-off in software stocks, a fresh interest rate hike cycle that cooled buyer demand, and a deepening housing downturn that threatens to cap prices for an extended period.
Management has acknowledged the difficulty of predicting how these forces ultimately play out, even as it leans on REA Group’s established market position and product set to ride through the volatility.
