REA boss expects interest rate rises could peak mid-year, property market to stabilise

“It’s going to be a calendar year of two very different halves. There is potential that we’ll have seen the top of the interest rate cycle in the middle of the year, so we could see a very healthy environment in the second half of this calendar year.”

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The results beat expectations of analysts, who forecast $611.2 million in revenue, but fell short in profit. News Corp chief executive Robert Thomson reassured analysts on Friday that REA Group was a “core part” of the company’s portfolio. The Murdoch-controlled media company is in talks to sell its 80 per cent stake in US real estate listings company Move, raising concerns among industry observers that it may be considering a sale of its 61 per cent stake in REA Group.

“[REA Group] is a different company to Move, and you can do the math of what REA is worth to us. Its market cap is $16.6 billion Australian,” Thomson said on Friday. “We all owe Lachlan Murdoch a debt of gratitude for his digital property prescience.”

REA Group owns 20 per cent of Move and would benefit from a successful transaction, which could be worth as much as US$3 billion ($4.3 billion). Wilson declined to comment on the transaction.

News Corp also used its announcement to flag a 5 per cent reduction in headcount across the business. That decision does not impact REA Group, but Wilson confirmed the company was also implementing its own measures to manage costs, and also expected a reduction in staff numbers by the end of this calendar year. He said most of that would occur organically, by slowing hiring processes when a person leaves.

Shares in REA Group were down 2.6 per cent to $121.2 in early morning trading, but analysts are upbeat. UBS media analyst Lucy Huang said it was a strong result.

“Outlook commentary is relatively positive for now,” Huang said. “We remain watchful on second half volumes … it is likely too early to see the full impact of recent rate rises on consumer seller sentiment.”

It was “a strong result for REA, especially Aus (residential) depth penetration”, she said, noting the group had “significantly outperformed our expectations, suggesting REA is potentially taking more share in the current uncertain environment”.

With AAP