(Reuters) - Online real estate classifieds portal REA Group (REA.AX) said the recovering Australian residential market would boost revenue in the second-half as its first-quarter profit fell 14%, sending its shares to almost three-month lows on Friday.
The Australia property market is emerging from a two-year downturn that hurt consumption and corporate earnings. Home prices rose for a fourth straight month in October amid record-low interest rates and looser lending standards.
However, the improvements have yet to fully translate into stronger profits. This week saw two Australian-listed construction material providers, James Hardie (JHX.AX) and Boral (BLD.AX), warn of ongoing softness in the housing market.
REA said property listings would continue to decline in the first half before picking up in the second half, lifting revenue growth later in the year.
“We know the buyers are back and it’s only a matter of time before the sellers follow,” REA Chief Executive Officer Owen Wilson said in a statement.
Residential property listings in Australia were down 15% in October, with Sydney and Melbourne posting sizable declines, the company said.
“Generally there’s always been a bit of a lag there,” CommSec market analyst James Tao said, referring to the way listing volumes follow rising prices.
REA, which is majority-owned by News Corp (NWSA.O), reported earnings before interest, tax, depreciation and amortization (EBITDA) of A$114.9 million ($79.26 million) for the first quarter ended Sept. 30, compared with A$133.1 million in the previous corresponding period.
Its shares were down as much as 5.4% at A$100.99 by early afternoon trade, while the broader market was marginally lower.
Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Dan Grebler and Stephen Coates