Domain makes $15.9m profit as listings slide

The housing market is tougher than at the height of the pandemic, says Domain’s boss. But he believes immigration and higher rental yields will help bring it back.

Domain chief executive Jason Pellegrino.

Nine Entertainment-controlled property portal Domain Holdings has turned in a $15.9m profit after a tough half as interest rate rises slashed property listings.

Domain’s earnings before interest, tax, depreciation and amortisation was off by 19.2 per cent to $49.3m but it said it was making progress on its strategy with new products and pushing more into brokering loans.

“The challenges of the current property environment are well known given the dramatic change in global inflation and geopolitical risk, and the impact of nine interest rate increases in nine months,” Domain chief executive Jason Pellegrino said.

He said Domain had weathered major events, including the financial services royal Commission and Covid-19 but the recent market has been harder.

“It is telling that the scale of the listings declines during the latest December quarter eclipsed both those events, with Sydney and Melbourne recording listings declines double the market average,” he said.

The company has cut costs and said it continued to be optimistic about the longer-term prospects for the market “with upsides from the return of immigration, encouraging auction clearance rates and the increasing attraction to investors of rising rental yields”.

Mr Pellegrino said that Domain was seeing improving buyer inquiry and open-for-inspection activity.

“We are navigating this short-term volatility, while remaining focused on driving our marketplace strategy, and positioning Domain to fully benefit when listings return,” he said.

Domain’s operating costs in the first half jumped by 29 per cent, due to additional acquisition expenses, a catch-up from Covid-19 related austerity and investment in growth plans, but this would be reined in during this half.

The company’s residential revenue was slightly lower and it said new products had resonated. Mr Pellegrino pointed to a range of digital products but said that print revenues declined 16 per cent year on year, which was ahead of the overall “challenging” publishing and listings market.

Domain said that trading in January had reflected a continuation of the challenging market environment.

Costs for the full year are expected to come in at $250m to $255m, in line with guidance last December.

The company expects earnings margins this year will see a low single-digit percentage point reduction against last year.

Domain shares closed 12c higher at $3.18.