👉 Background: REA Group is the ASX-listed company behind realestate.com.au - Australia’s most visited property listings site, along with realcommercial.com.au, Flatmates and MortgageChoice. REA Group listed on the ASX in 1999, with more than 60% of the company still owned by News Corp. And to this day, they've maintained their strong position in the market.  

👉 What happened: In FY25, REA’s net profit jumped 23% to $564 million and they increased their full-year dividend by 31%. A big part of that profit spike came from selling off its stake in PropertyGuru for $430 million in cash, and extending its market dominance over Domain. After these announcements, REA’s share price jumped more than 8%... equivalent to $2.5 billion (about 4 free standing houses in Sydney).

👉 What else: The share price jump is largely because REA Group’s network effects keep growing and growing. And despite Domain’s new owner, it’s got a looooooot of catching up to do.

What's the key learning?

💡A network effect is when a product or service becomes more valuable as more people use it… and that’s exactly what’s going on with REA Group. REA has an average of 12.1 million monthly users compared to Domain’s 5.4 million monthly users.

💡So the more prospective home buyers scroll through REA, the more agents have to list on it. The more that agents list on REA, the more buyers scroll...and so the cycle continues. It’s this flywheel effect that makes REA so hard to compete with.

💡That dominance gives REA the confidence to lift prices on premium listings year after year… because when you’re the gatekeeper to the Great Australian Dream, you can charge whatever you like.