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The recruitment of more brokers to Mortgage Choice and a surging housing market have contributed to a jump in revenue for parent company REA Group.
REA Group posted its results for the first half of the 2022 financial year on Friday (4 February), revealing a group net profit after tax of $226 million, 31 per cent higher year-on-year.
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Group revenue was up by 37 per cent year-on-year, to $590.4 million.
The financial services division, which includes aggregators Mortgage Choice and Smartline, had produced a total revenue over the half of $41.3 million, surging year-on-year from the $11.7 million generated in the first half of FY21.
Following on from the Mortgage Choice acquisition, which completed in July last year, REA reported the integration of the business is on track to wrap up by the third quarter of FY23 (around this time, next year).
The integration includes the transition of brokers to the Mortgage Choice platform and rebranding the combined aggregators as one business, under the Mortgage Choice name.
The financial services division’s revenue had been boosted by settlements growth of 39 per cent year-on-year to $9.3 billion, to $13 billion, while the loan book crept up by 3 per cent to $86.1 billion.
Mortgage Choice had contributed the bulk of the settlements and loans totals, with a $54.6 billion book and $6 billion in settlements during the first half of FY22.
The rise in settlements had been driven by the broker network growing in size, up 7 per cent from the previous half-year, to a final headcount of 978.
There had also been “increased productivity in a buoyant housing market, partly offset by higher broker ratios”, REA Group stated.
The higher payout ratio for brokers is tied to strong volumes, REA group chief executive Owen Wilson explained.
“When you get really strong volumes, in a particular month, you get a slightly higher payout,” Mr Wilson told analysts on Friday (4 February).
“So it’s a great position to be in, it means that brokers are writing almost as much as they physically can.”
Despite the omicron wave and ongoing uncertainty from COVID, the REA board has resolved to pay shareholders an interim dividend of 75 cents per share, 27 per cent more than its payout a year prior.
Mr Wilson reported the easing of COVID restrictions had seen a wave of new listings arrive on the realestate.com.au website, with “sellers making up for lost time in lockdown”.
Revenue from the property and online advertising segment, across realestate.com.au and realcommercial.com.au, as well as data and insights business PropTrack, generated revenue of $525 million, up 25 per cent for the half.
Looking ahead, the company has issued a somewhat optimistic outlook, reported slashed days on market and high clearance rates.
“As we commence 2022, these conditions are largely the same, despite the speculation about the timing of future interest rate increases,” Mr Wilson said.
“We do expect demand to moderate as the year progresses, bringing a healthy rebalance of the supply/demand equation. That said, buyer activity on realestate.com.au remained very healthy in the normally quiet month of January.”
Factors such as the federal election and further potential regulatory measures to slow down house price inflation could hit listing volumes, Mr Wilson warned, but any impact to the market is expected to be temporary.
REA is due to host its first investor day in May, where it plans to reveal details on growth initiatives.
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