Citi has released a report suggesting that Google’s introduction of sponsored ‘Homes for Sale’ listings is unlikely to significantly affect REA Group, despite concerns raised by the market following a similar situation with Zillow in the US. REA Group operates realestate.com.au, Australia’s leading property portal. The company provides a platform for listing properties and connecting buyers, sellers, and renters.
The broker identifies the primary risk as a potential reduction in search traffic. However, Citi points out that approximately 80 per cent of realestate.com.au’s traffic comes directly to the site. This high level of direct engagement substantially reduces REA’s vulnerability to alterations in Google’s search algorithms and presentation.
A secondary risk, according to Citi, involves a possible fragmentation of vendor marketing budgets. The broker believes this risk is more tangible but suggests it will likely resemble the impact of social media advertising, rather than serving as a direct replacement for dedicated property portals. Citi suggests it could complement REA’s existing Audience Maximiser product, especially given the Australian market’s structure where vendors, rather than agents, typically manage marketing expenses.
Furthermore, Citi highlighted remarks from Domain’s CEO indicating that Google has previously experimented with comparable products. Uptake was limited by the complexities involved in onboarding real estate agencies. Citi maintains a Neutral rating on REA with a 12-month target price of $279.25, justifying this valuation with REA’s dominant market position in Australia.
