Sydney, June 24, 2026, 07:07 AEST
REA Group is set to open Wednesday at its lowest level in a year after shares dropped 3.1% to A$131.52. That puts the stock 17.3% under the average purchase price in its just-completed A$200 million buyback.
REA closed at its lowest for Tuesday, down 50.6% from its 52-week high. Trading volume was roughly 31% higher than average. The S&P/ASX 200 eased 0.33%. REA still trades at a trailing P/E of 30.3, with growth assumptions key to the current valuation, even after the latest fall.
REA’s buyback puts a number on the shift. The company bought back 1,257,405 shares for A$199,999,934, paying an average of A$159.06. The buyback ranged from A$147 to A$178.36 per share. Shares were cancelled, so this isn’t a mark-to-market loss; at Tuesday’s close, the same money could take out about 1.52 million shares, or 21% more.
The buyback reduced the starting share count by 0.95%, which should add about 1% to earnings per share if everything else stays the same. That boost is limited compared to the 10% fall in listing volumes UBS models over two years. REA’s prices can offset lower volume, but the numbers don’t line up directly.
Macquarie’s David Fabris lowered his target to A$155 from A$190, calling the budget a “fourth period of housing market reform in 40 years”. UBS also cut its target, down 22% to A$165. Wilson Asset Management’s Shaun Weick described property-policy moves and AI worries as a “double whammy”, saying SEEK and CAR Group each lost around 46% and 25% over the past year. Wilson Asset Management
REA’s listing mix could matter more than the overall count. Bank of America projects the company will post A$707 million in net profit after tax for fiscal 2027, about 5% under consensus. For fiscal 2028, BofA’s forecast is A$808 million, 6.3% below market.
BofA said Sydney and Melbourne make up close to 40% of Australian listing volumes, with these markets delivering REA’s highest average ad revenue per listing. The bank sees revenue per residential sales ad rising 10.5% in fiscal 2027, slower than the 12% market forecast.
REA’s May numbers tell the story. National new listings moved up 1.9% year on year, but Sydney dropped 1.8% and Melbourne fell 3.2%. In total listings, Sydney gained 7.1% and Melbourne added 1.5%. Nationally, total listings slipped 3%. Stock in Sydney and Melbourne now sits 10% to 15% above the usual May mark.
Sydney’s auction clearance rates have stayed under 50% since mid-March, but most homes still sell in under 30 days. There are fewer new listings while old stock hangs around. Buyers have more time, which may put pressure on vendors who pay up for premium ads.
REA has managed to balance soft volume growth by raising prices and rolling out more expensive products. In the third quarter, residential revenue climbed 12% even though national sales listings ticked up only 1%. Revenue per listing was up 14%. Realestate.com.au drew an average of 12.9 million users a month, with 6.3 million not using its top rival, and counted 150 million visits monthly.
Economists at the company see capital-city home prices ending 2026 unchanged and then picking up 5.5% in 2027. Sydney is set for a 3% drop this year, Melbourne for a 4% fall. Perth could rise 8% and Brisbane 5%. Smaller, stronger markets could help keep national listing numbers up, but that will not make up for lost revenue from Sydney and Melbourne.
REA’s forecast comes in less negative than broker views. Plans for July 2027 would scrap negative gearing on existing homes, cutting the option to deduct rental losses from salary income, but current investors keep the old terms. REA thinks turnover will stay “broadly unchanged” medium term and puts the long-term drop in home prices at 1% to 5% below where they’d be without the change.
The report says the incentive for owners to delay selling for tax reasons might not be that strong. It notes just half to two-thirds of investors are negatively geared, and 72% have only one rental property.
The bearish view isn’t settled. If investors dump stock before July 2027, rate hikes pause, and REA keeps up double-digit revenue-per-listing growth, earnings could beat current forecasts. But another round of rate rises, a tougher lock-in, or weaker clearance rates would cut volumes more. REA has already finished its stated buyback.
REA faces a key check at the next full-year report, as it tries to push revenue per listing higher in its top two housing markets, which are cooling. Right now, the buyback tells the story: the company cancelled just under 1% of shares, but the market slashed value much faster.
