REA Group CEO Owen Wilson: High rents driving inflation up

Owen Wilson says property rent prices are still rising, on the back of low stock, and contributing to higher RBA interest rates.

REA Group chief executive Owen Wilson

CEO SURVEY 2025: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2025? Official forecasts have Australia trimming interest rates from the first half of calendar 2025, is that consistent with your view? What are you seeing around inflation in your own business?

The Australian economy is facing the weakest annual GDP growth, outside of the pandemic, since 1991, seven consecutive quarters of declining per capita GDP growth, weak productivity growth, muted household spending and significant cost of living pressures. It’s concerning that the primary reason for current growth is our increasing population, while government spending appears is to be crowding out the private sector.

The housing market has been somewhat shielded from these challenging conditions with high levels of activity being driven by healthy demand, a strong labour market and high levels of immigration.

We expect two, possibly three interest rate cuts in calendar 2025, with the first in May and probably another one or two toward the end of the year. There is an increasing possibility these cuts could come earlier if inflation, the labour market and consumer spending continue to moderate in coming months. Even so, elevated government spending in the public sector and on infrastructure remains a risk to inflation. Rents are also contributing, and these are still rising because rental stock availability remains too low. If rates are to come down, then addressing these inflationary impacts needs to remain the focus.

Throughout the year we saw cost pressures ease in our business. The exception has been some technology costs which have seen significant year on year increases. Generally, we expect a further reduction in costs if inflation continues to fall.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady, or trim your investment spend?

Our investment will remain elevated as we head into 2025 as we continue to drive our growth agenda. This year we kicked off a number of big multiyear projects across the business to support the delivery of our strategy. We are transforming the realestate.com.au listing experience and I’m excited to see this improve the property journey for consumers while enhancing the value we deliver to customers. We are focused on exceeding the privacy expectations of our consumers and our investment in both privacy and cyber security has increased and remains a key priority.

Reform

As we move into an election year, in your mind, what’s the single biggest lever that can/should be used to lift Australia’s competitiveness or productivity? This could be across any area from labour market, tax reform, training or other areas to encourage investment.

Holistic taxation reform is a significant opportunity and a key lever that hasn’t been utilised effectively. We know that having more people live in cities results in a more productive workforce so taxation policy that encourages higher density housing development in desirable locations should be on the agenda. Removing stamp duty would also support mobility and allow Australians to move closer to where they work, therefore better utilising existing housing and local infrastructure.

At the same time, new build houses and apartments are taking longer, and becoming more expensive, to build. This compounds the issue of housing supply and affordability at a time when we can least afford it. While progress has been made towards the government’s ambitious housing targets, without available construction workers, delivery will continue to fall short. Further investment needs to be made in skilled trades training, and to free up the construction industry for housing development, we need to be more selective on infrastructure projects.

People

Has your organisation’s approach to flexible working – including working from home – evolved during the year. Is this likely to change further into 2025?

Hybrid working is well entrenched at REA and we see it as a clear win-win for employees and our business. Since formally introducing our hybrid working policy a few years ago, our engagement scores have only increased, reaching a record-high 89 per cent this year. As a technology company we have always been very flexible and believe it is an important employee proposition in a competitive talent market. I don’t see a world where our workforce will be in the office five days, or entirely remote and we will continue to adjust to ensure we get the balance right.

Technology

Where is your organisation along the AI journey – is it in the developmental stage, or are you now using the technology at scale across your business? If so, are benefits matching the promise?

We’ve been using machine learning and AI for over a decade now so it’s well embedded within the business and powers many of our products and consumer experiences. AI, personalisation and real-time data will power our next generation consumer platform and this is currently in the first phase of rollout. This will be a game-changer for our consumers because it will deliver a completely personalised experience. It will provide each visitor with the most relevant content to help them deeply understand properties in the context of their individual property journey.

Beyond this, I think there’s also great potential for AI to drive workforce productivity. We’re looking at how we can use AI to innovate the way we extract and use data and improve operational efficiencies. Our ability to execute on these opportunities comes down to our team and investing in them to ensure they’re equipped with the knowledge, skills and capability to leverage AI in the most effective way.

We have doubled down on our investment in AI, expanding our teams, launching our own version of ChatGPT, and ensuring our people have access to new features in our existing suite of enterprise tooling. We are also investing in new tools. Our developers have access to generative AI tooling to increase productivity, which has shown up to a 20 per cent reduction in time to code.