Auction clearance rates are on the up and that could be good news for Domain Holdings Australia Ltd (ASX: DHG). I'll be watching the Domain share price this week after a recent article in the Australian Financial Review (AFR) on rising clearance rates in Melbourne.
Why the Domain share price could climb
According to the AFR, Melbourne's clearance rate rose to 73% on the weekend despite tough industry conditions.
It's worth noting that these numbers were based on low volumes. Data collected by vendor CoreLogic reported 178 homes cleared out of 244 results.
That could be good news for the Domain share price as a real estate media leader. Domain tends to benefit from a strong housing market as many sellers look to list their homes in a hot market.
According to the AFR, 18% of homes were withdrawn, postponed or converted to a private sale. That means more listings are being left up as sellers are buoyed by market conditions and the chance of a sale.
Prominent realtor Ray White was quoted in the article as saying only 2 of its 53 weekend auctions failed to attract a bid, in a further show of market strength.
Strong government support has helped to prop up the economy in the first half of 2020. That has helped buoy investors spirits, despite the economic uncertainty in the short- to medium-term.
The Domain share price has reflected some of that positivity in recent months. In fact, shares in the real estate media group climbed 4.4% higher on Friday and are up 105.8% since the March bear market.
Domain is also outperforming the S&P/ASX 200 Index (ASX: XJO) this year despite slumping lower.
Is Domain in the buy zone?
These latest clearance rates are certainly good news for the Domain share price. However, I'm not sure I'm bullish enough to buy before seeing the company's latest financials.
The Domain share price is still down 3.2% in 2020, which means there could still be good value.
I think it's worth waiting until Domain's financial results are released on 20 August to get a better idea of the financial and market outlook for FY21.
That could also help inform a decision on whether to buy ASX real estate investment trusts (REITs) like Mirvac Group (ASX: MGR) in 2020.
