Is the REA Group share price a buy after passing $100?

PHOTO: REA Group Limited (ASX: REA)

Is the REA Group Limited (ASX: REA) share price a buy?

It just reached an all-time high as the share price passed $100 in response to the Australian Prudential Regulation Authority (APRA) news.

APRA has decided to remove the 7% interest rate buffer required by borrowers and instead borrowers will only need to be able to show they can afford the loan with a 2.5% interest rate buffer instead.

The Reserve Bank of Australia (RBA) has also been responsible in sending the REA Group share price to the moon with it cutting Australia’s interest rate to just 1%.

REA Group investors will be hoping that APRA’s adjustment will mean potential property buyers are accepted for their mortgage applications, particularly in light of the interest rate cuts. This could mean a stabilising of the Australian house prices, perhaps even a return to growth.

This would allow REA Group to charge more for its advertisements (based on higher house prices) and, importantly, more properties hitting the market meaning there are more properties generating advertising revenue for the company.