A property group has delivered growth through its financial services division off the back of its investments in the third-party home lending space.
According to REA Group’s full-year 2018 (FY18) results, it reported financial services revenue of $29.3 million ($10.8 million EBITDA), which it has said was driven by the group’s acquisition of Smartline in August 2017, and its purchase of a 70 per cent stake in realestate.com.au Home Loans, funded by NAB-owned aggregator Advantage Finance Services, in September 2017.
The group has said that since launching realestate.com.au Home Loans, it has saved over 350,000 financial profiles and generated more than $75 million per month in loan applications.
However, the group has noted that the result was affected by slower credit conditions as a result of tighter lending criteria.
“This result is at the upper end of previous guidance reflecting a reduction in the run off rate of mortgages as banks have tightened lending practices. These conditions have also impacted the volume of new loans written.”
The group reported a total revenue of $807.7 million, up 20 per cent from FY17, with its net profit after tax also increasing, rising 23 per cent to $279.9 million.
REA notes risks to growth
Despite reporting positive growth, REA Group has warned that a continued softening in the Australian housing market conditions could pose “significant risk” to its income streams.
“A decline in market conditions could result in a significant reduction in the number of property listings on REA’s sites.
“The property market is driven by employment, interest rates and consumer confidence. A substantial change in these market indicators could result in a deterioration in the performance of the property market.”