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REA Group looking for boost from rate cut

AAP logoAAP 8/08/2016 Petrina Berry

REA Group, the company behind the realestate.com.au site, hopes the latest cut to official interest rates will boost property listings that took a hit during the federal election.

REA chief financial officer Owen Wilson says uncertainty surrounding the election outcome during July had contributed to an 11 per cent drop in listings.

However, he suspects people who put off selling in July would look to sell in spring, a traditionally strong time for real estate that would hopefully have added vigour after the Reserve Bank's cut to the benchmark interest rate in August.

"The rate cut has been a good thing for us in terms of volumes in the market," Mr Wilson told analysts on Tuesday after the group unveiled its 2015/16 financial results.

"We saw record auction clearance rates in Melbourne at the weekend on the back of the rate cut."

He said the group expects revenue growth for the first six months of the current financial year to be skewed towards the second quarter.

REA reported a 20 per cent rise in profit to $253.3 million and a 21 per cent lift in revenue to $670.6 million in the 12 months to June 30.

The group, which is majority owned by News Corp, said Australian revenue had increased 17 per cent to $555.2 million.

Chief executive Tracey Fellows said real estate agencies' willingness to pay more for top tier listings had helped offset lower volumes of property listings in the second half of the year just ended.

REA's business spans four continents following the acquisition of Asia-focused online real estate site iProperty in February, which had helped lift the group's Asia division's revenue to $23.9 million from $4.5 million.

And, with average property prices in Hong Kong and Singapore higher than in Australia, the acquisition of iProperty - which operates in those markets as well as in Thailand, Malaysia and Indonesia - could significantly enhance its growth.

The company, which also has a stake in the Move portal in the US, said it could expand further internationally and was looking to identify opportunities.

REA shares fell almost seven per cent following the results announcement but regained some ground to be 60 cents or one per cent lower at $59.60 at 1450 AEST.

OptionsXpress market analyst Ben Le Brun said REA's revenue rise was below market expectations and the 81.5 cents dividend for the year was also lower than the anticipated 84.5 cents.

"It missed all the key metrics and being a very expensive stock in the first place, this sparked uncertainty among investors," he said.

REA GROUP DISAPPOINTS INVESTORS

* Net profit up 20pct to $253.3m

* Total revenue up 21pct to $670.6m

* Final dividend up 5.0 cents to 45.5 cents, fully franked

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