Morningstar flags cost woes for Australia's REA as Domain rivalry heats up

Morningstar says REA Group's REA.AX Australian segment, which accounts for most of group earnings, is seeing costs exceed revenue, although the rate of cost growth is declining

Says rising costs signal competition with peer Domain, which was acquired by CoStar CSGP.O last year

Property listings platform REA on Friday logged 24% decline in HY net profit, flagged high single-digit cost growth expected in FY26

Morningstar does not expect conditions to improve materially for REA for the rest of the year as competition intensifies; rising interest rates likely to dampen listing activity

Investment research firm maintains fair value estimate of A$137; says shares continue to screen as "materially overvalued"

Stock down 8.3% so far this year, as of last close