ASX real estate golden-child REA Group dropped more than four per cent on Friday, now down 10 per cent over the past month. Is the Budget to blame?
REA Group closed at A$152.02 on Friday 22 May 2026, capping a month in which the stock has shed 10 per cent of its value. It now trades at a significant discount to the 52-week high of A$265.98 reached late last year.
Peter Switzer and Paul Rickard have been theorising on the subscriber-only Boom, Doom, Zoom show that the relentless march of AI is coming for the property listing giant, but it might be more than just robots to blame for the recent fall.
REA Group (ASX: REA)
REA Group’s revenue model depends on listings. Vendors pay to list. Premium placements and feature packages all sit on top of the vital base listing fee. When the volume of property going to market falls, REA’s revenues fall with it.
Cotality, the property data business previously known as CoreLogic, published its preliminary auction clearance figures for the week ending 24 May 2026 over the weekend. The combined capitals clearance rate sat at 58.2 per cent across 2,339 scheduled auctions. Sydney cleared 56.9 per cent of its 823 auctions, Melbourne 60.2 per cent of 1,043, Brisbane 45.7 per cent of 194, and Canberra 54.3 per cent of 131. Adelaide was the standout at 72 per cent of 135 auctions. Of the 1,667 auction results recorded by Cotality across the combined capitals, 698 were uncleared.
A clearance rate in the high fifties is not catastrophic. It is, however, well below the seventy per cent threshold typically associated with rising property markets. The proportion of auctions being withdrawn ahead of the day matters too. In Sydney alone, 150 auctions were withdrawn over the week, which represents 18 per cent of the original scheduled total. In a strong market, vendors take their property all the way to auction.
Changes announced to the capital gains tax in the most recent Federal Budget might be contributing to these poor listing and clearance figures.
Changes to the CGT discount and negative gearing won’t take effect until legislation can be brought before Parliament, but it appears buyers are reassessing whether to acquire established housing due to recent changes.
Add to that a rising interest rate environment (Peter Switzer is predicting one more rise at the next meeting before a pause), and REA’s problems may start to manifest themselves in the share price. Although, Morningstar (which is targeting a price of $129 for the stock, calling it ‘overvalued’ right now) has reported that rising interest rates does contribute to higher earnings for REA.
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