Domain Holdings records higher profit in 2024 fiscal year following growth in new listings
Property portal Domain’s profit growth narrowly missed expectations as it the market is stabilising for the first time in several years.
Nine Entertainment-controlled property portal Domain says a stabilised housing market for the first time in several years is good news for buyers and sellers, after profit growth in the past financial year fell short of expectations.
The company told investors trading in July saw ongoing growth, with new ‘‘for sale’’ listings up 4 per cent, year on year, on a like-for-like basis, but growth rates in Sydney and Melbourne moderated following a strong performance in fiscal year 2024.
While Sydney and Melbourne had lower growth rates, there was improving momentum elsewhere, ahead of spring.
Spring is seen as the busiest time for the housing market, with double-digit growth often reported in many parts of the country.
Domain chief executive Jason Pellegrino said the property market was returning to a less volatile, more predictable cycle for the first time in several years.
“We’ve gone through three years of royal commission, Covid and rapidly rising interest rates, and we’re now back to a more seasonal and predictable pattern,” he said.
“The housing market is being led by Sydney and Melbourne, while Queensland, South Australia, Western Australia follow some of those patterns, and then the variability of volatility reduces within a smaller range.”
Mr Pellegrino noted that Sydney and Melbourne listing volumes were slightly above the five-year average, but were not rising at the pace seen in the past year.
He said Queensland was not starting to pick up pace after listing volumes fell below the five-year average.
“We don’t feel that listings will collapse in Sydney, but you’re not going to see the growth and improvement that we’ve become used to in the past year,” he said.
“We will see that grow further as we hit the spring cycle and will peak in the back end of October.
“All early indicators of the spring cycle look like a healthy outcome.”
Hopes for a fall in interest rates which could be off the cards until next year were behind a rebound in the housing market for much of the past 12 months, he said.
Mr Pellegrino said reduced fears about interest rates rises had supported the stabilisation, encouraging many buyers and sellers to enter the market.
“About 18 months people did not know what interest rates would be, but we’re close to the top, and even if there might be another 25 basis points that is not going to change the market,” he said.
“It’s likely rate cuts will occur next year and people are confident conditions are returning to normal, which drives activity in the housing market.”
Domain reported a 13.1 per cent increase in revenue for the past financial year to $391.1m, while expenses increased 7.2 per cent to $254.1m.
Overall the company recorded a 27.9 per cent increase in profit, excluding significant items, to $49.4m.
The result comes amid poor market sentiment following a barrage of interest rate rises.
It posted a $26.1m profit in the 2023 financial year.
E&P Financial analyst Entcho Raykovski said the result was a “miss” with profit coming in less than $52m predicted by markets, while earnings before interest, taxes, depreciation and amortisation were $137.1m, compared to $138.8m expected.
Profit growth was driven by a strong uplift in the number of residential property listings across the country.
Residential revenue was up 19 per cent, while national ‘‘for sale’’ listings increased 3 per cent for the year.
Mr Pellegrino said stabilisation of the housing market was better for Domain.
He said a hot market tended to discourage sellers from listing due to concerns about finding their next home.
“We perform well in more normal and stable market environments. Our business gets impacted at those peaks of volatility, at the bottom end, or when there’s fear, or at the top end.”
Domain expected stable EBITDA margins in this fiscal year, balancing confidence to invest in the ongoing growth of the business with continuing efforts to drive productivity.
Domain’s rival, REA Group, which is majority-owned by News Corp Australia, publisher of The Australian, reported in its full-year results that new property listings were up 12 per cent nationally on its platform in July. It came as its $461m underlying profit was better than market expectations.
Domain declared a final dividend of 4c per cent to take the full year payout to 6c per cent, unchanged from a year prior.
Shares in Domain fell 3.1 per cent to $3 on Friday.
More Coverage
British-backed Merlin selling down regional Aussie assets
Two much loved family holiday destinations are on the block, with the Otway Fly in Victoria and Illawarra Fly in NSW now on the sales block.
Albanese bagged a property bargain, says star agent John McGrath
The boss of the real estate agency which sold the PM’s new $4.3m clifftop mansion says he nabbed a bargain price compared with what he would have paid for a similar property in Sydney’s trophy markets.