REA boss grapples with ‘worst market’ for property in decades


National listings fell 15 per cent over the three months to September 30, with a 22 per cent drop in Sydney and a 21 per cent decline in Melbourne.

“That quarter, the fact the residential and development and mortgages [declined], to have that kind of a perfect storm … we haven’t seen that within 30 years,” he said. REA’s share price dropped 2.8 per cent to $103.72 by 10.29am on Friday.

However, Mr Wilson said that to have kept revenue relatively stable in the current environment was a good outcome that met the expectations of most analysts.

“This was a manufactured downturn,” he said.

REA Group, which is majority owned by News Corp, laid off 60 staff as part of a restructure in September.

The fall in profits for the portal comes as building materials company Boral also took a hit due to the weak first quarter, but property prices have started a recovery to their fastest growth pace since the boom time period of 2015.

“APRA [the Australian Prudential Regulation Authority] looked at the housing market and decided it was getting too hot. They brought in lending restrictions on interest only loans, investor loans, foreign borrowers,” Mr Wilson said, adding that state governments had also slugged foreign borrowers with higher stamp duties.

He also pointed to the impact of the banking Royal Commission has having “spooked” lenders into changing their practices and drastically reducing how much they would lend, and the uncertainty of an election, as affecting the market.

“Most of those things are now unwound,” he said. “All that uncertainty has gone.”

He said the business was seeing “a lot of green shoots” with buyer activity up by more than 30 per cent over October compared to the year before and the company’s mortgage broker business also up for the first time in a year.

“The buyers are absolutely back,” Mr Wilson said. “We’ve clearly bottomed on house prices [after] four months in a row of increasing house prices.”

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He did not expect to see a major recovery ahead of Christmas, but said he was “pretty confident” that there would be some positive signs in the new year.

In October, listings declined 15 per cent in Sydney and 17 per cent in Melbourne.

REA Group is forecasting lower listings for the first half of the 2020 financial year compared to the same period in 2019, with revenues to be skewed towards the second half of this year.

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