Domain is struggling as people refuse to sell.
There was an interesting story that caught my eye last week.
Basically, Domain, which runs one of the biggest real estate portals in the country, is a publicly listed company and so has to report results.
And they had a shocker.
And the thing that really smashed them was an “unprecedented” collapse in property listings on the site:
The collapse in listings was so bad it drove a 24% decline in profits.
Ouch:
Residential property listings fell at the fastest rate in Domain’s history in the first half of the 2023 financial year, chief executive Jason Pellegrino says, driving a 24.2 per cent fall in profits to $16.4 million.
The “unprecedented listings reduction” outpaced the drop during the COVID-19 lockdowns and the banking royal commission.
“It’s telling that the scale of the listings declines during the latest December quarter eclipsed both those events,” Mr Pellegrino told investors.
“The fall in Sydney and Melbourne was about double,” Mr Pellegrino said, which affected how much Domain made from listings.
“It’s one of the toughest listing environments that we’ve seen.”
Yep, sellers are still on strike. They’re just not wanting to play ball.
They still remember what they’re properties were worth just 18 months ago, and probably sensibly, they expect we’ll get back there in fairly short order.
So they’re not bringing stock to market.
Somewhat ironically, this reluctance to sell is one of the key factors underpinning prices right now.
Without a surplus of stock on the market, there just isn’t that much competition on the sell side, and sellers are able to hold out for decent prices.
On the buy-side, Domain’s CEO sees a lot of interest, even if that’s not translating through to activity just yet.
Despite the rapid fall in listings, appetite from buyers was still strong, Mr Pellegrino said. But a deep lack of confidence, driven by poor communication, was holding the market back.
“What we’ve seen in January is a strong performance of buyer activity on our site. Attendance at open home inspections is up, inquiries to agencies are up, and that’s a really positive signal that the buyers are out there – auction clearance rates are still fairly strong,” he said.
“It’s really about, essentially, Australians getting confident that they can factor in an appropriate rate rise into their budgets going forward.”
This is what I reckon too.
The thing holding buyers back right now isn’t the level of rates per se. It’s the uncertainty around rates.
It’s hard to know if you can afford a property right now because you don’t know where rates are going to be in 6 to 9 months.
Things are changing very rapidly, and that uncertainty has to be putting a lot of buyers off.
But it won’t last.
Soon, the outlook for interest rates will become clearer.
Buyers will then return…
… to a market with very few sellers…
… and prices will snap back.
JG.
Gabru says
Thanks