Domain turns upbeat on property market outlook

The real estate listings site points to improving trends in Sydney and Melbourne markets.

Domain Holdings CEO Jason Pellegrino. Picture: Hollie Adams

Property classifieds s site Domain Holdings Australia offered an upbeat outlook on the prospects of a residential market recovery at its annual general meeting on Monday.

The company warned market conditions had remained challenging through the first half of the year but pointed to improving trends in Sydney and Melbourne.

Domain had a 12 per cent slip in revenues through the first four months of the financial year, almost mirroring the slump in new home listings, down 14 per cent over the same period.

Auction volumes – a key indicator of demand and sentiment- were down 10 per cent in Sydney and 18 per cent in Melbourne in the four months to October, but sentiment is now rising as house price growth returns and auction clearance rates in major capitals top 80 per cent.

Domain’s digital revenues also fell 8 per cent over the four month period.

While significant, the falls reflected an improvement on the same period in the last financial year

Domain chief executive Jason Pellegrino told the company’s annual general meeting in Sydney the market was picking up.

“While the listings weakness in the second half the FY19 has persisted, we are starting to see the gap versus last year close somewhat,” Mr Pellegrino said.

“Buyer demand has continued to strengthen as evidenced by the auction clearance rates and house price growth, particularly in Melbourne,” he said.

Yet, while conditions are slowly on the up, cost cutting is also a focus

Mr Pellegrino said the next year would also be focused on growing the business, as Domain invests in its agent services platforms, including the newly announced acquisition of point of sale platform Real Time Agent.

It struck a deal to buy the privately-held Bidtracker Holdings, that operates Real Time Agent, for $24.8m, $19.4m of which was payable in cash on completion.

The vendors could earn up to $15.6m in cash if the business hits targets over fiscal 2020 and fiscal 2021, resulting in a maximum price of $35m if 200 per cent of targets laid out in its business plan are hit.

The service is used by more than 4000 agents and to process more than $40bn in property transactions.

Real Time Agent was started in 2016 by former real estate professionals, Angus Ferguson and Daniel Portelli.

Domain shares closed 5.1 per cent higher at $3.28.