The biggest decline in listings in Domain Group’s history has resulted in a drop in profits, though revenue still rose in the first six months of the financial year.
The listings decline, most evident in Sydney and Melbourne, resulted in profits falling 24.2 per cent to $16.4 million.
Revenue was up 7.1 per cent to $188.68 million.
Domain Group CEO Jason Pellegrino told Elite Agent that the decline in listings was primarily due to a dip in vendor confidence, much of which was driven by the current cash rate cycle.
“What’s driven the decline that we saw in the first half is clearly one factor, which is vendors are lacking confidence and they are primarily lacking confidence because of the shock and awe in our system driven by nine interest rate increases in nine consecutive months, leading from a prior period where there was a statement in a market setting (that) interest rate increases are not likely to happen for an extended period of time,” Mr Pellegrino said.
He said that it was a “fools errand” trying to predict when confidence would return to the market, adding that recent statements by Reserve Bank of Australia Governor Philip Lowe had not helped.
“When you look at what’s driven that lack of confidence, it’s surprise,” he said.
“What they (vendors) are looking for is a feeling of confidence that any sort of movement is going to be within a zone of tolerance and they can expect they’re not going to be surprised.
“So when statements come out that do surprise either way, you will see that it’s not supporting a return to confidence, particularly when that statement was probably at odds with statements that were made in the US where similar sort of inflation patterns have been being felt.”
Mr Pellegrino said listing declines in Sydney and Melbourne were “double” what they were in other markets, and that the two cities had “detached” from the national property market.
“Sydney and Melbourne always do lead the national property markets on the way up and on the way down, not just listing volumes but also price – that’s a clear fact,” he said.
Mr Pellegrino said that increased uptake of premium advertising products had helped Domain Group stem losses.
“If I look at the last six months, what’s been really impressive is in our core listings market, despite a nine per cent decline in national listings, we’ve seen a 38 per cent increase in the number of agents across the country that have stepped up to upgrade or new contracts with us, and that’s fantastic to see,” he said.
“We’ve seen really strong growth in our social boost product and that’s helping agents and vendors find potential buyers and build their brand, not just on the Domain property sites but across the web and across a range of social media platforms.”
The company’s data business had also seen strong growth, he said.
He said the acquisition of Realbase, finalised in the last six months, was also a positive.
“In the last six months, we’ve closed out the acquisition of Realbase, which is probably one of the most substantial PropTech businesses operating in Australia and which incorporates Campaigntrack as a product set that supports close to 50 per centof all listing transactions in the country at scale,” he said.
“Now as part of the Domain Group that really helps us move towards our vision of providing an end to end operating system and platform for agents to do their their their job more efficiently, more effectively.”