REA Group Ltd's stock plummeted 6.59% during intraday trading on Tuesday, marking a significant decline for the Australian real-estate classifieds company.

The sharp drop followed a bearish analyst report from Bell Potter, where analyst Michael Ardrey cut his recommendation on REA Group to sell from buy. Ardrey cited a combination of rising interest rates and taxation changes as key factors turning him from a bull to a bear on the stock.

According to the analyst note, a softening in listings volumes is expected to more than offset REA's yield growth, with declining property demand likely to hit valuations. Ardrey also pointed out that REA looks expensive relative to other ASX-listed classifieds providers and has a history of EPS declines during periods of falling home prices. Bell Potter cut its target price on REA Group by 37% to A$137.00 following the downgrade.