Thank you for standing by, and welcome to the REA Group Ltd Half Year Results 2022. All participants are in a listen-only mode. There'll be a presentation followed by a question and answer session. If you wish to ask a question, you'll need to press the star key followed by the number one on your telephone keypad. I would like to now hand the conference over to Alice Bennett, Executive Manager of Investor Relations. Please go ahead.
Good morning, everybody, and welcome. My name's Alice Bennett, Executive Manager of Investor Relations, and I'd like to thank you for joining REA Group's 2022 half year results presentation. Before we commence, I'd like to acknowledge the traditional owners of the land we are hosting our meeting in Melbourne, the Wurundjeri people of the Kulin Nation, and pay our respects to the elders past and present. Today, you'll hear from REA CEOs, Owen Wilson and Graham Curtin, REA's General Manager of Group Reporting. Unfortunately, our CFO, Janelle Hopkins, has had to attend to a sudden family emergency and is unable to be with us this morning. Owen will talk to our overarching financial performance and strategic highlights for the half year. He'll then hand over to Graham to talk to our financial results in more depth. Following this, we'll be happy to take your questions.
With that, I'll hand it to Owen to get us started.
Thanks, Alice. I'd like to welcome everyone this morning and also acknowledge the traditional owners of the land on which we're meeting and pay my respects to their elders past and present. REA has delivered an exceptional first half result for FY 2022, despite the continued pandemic-related disruptions, which saw our two largest markets in lockdown for most of the first quarter. Looking at our results from core operations for the half, revenue was AUD 590 million, an increase of 37%. EBITDA, after share of associates, was AUD 368 million, an increase of 27%, and NPAT was AUD 226 million, an increase of 31%. Pleasingly, we delivered a strong core EBITDA margin at 62%. The board has declared an interim dividend of AUD 0.75 per share, fully franked, a 27% increase on the prior corresponding period.
Combined with our exceptional financial result, REA continued to build on the strong momentum behind our key priorities. As you can see on this slide, a number of significant highlights and milestones were achieved in the half. Our personalized consumer experiences are delivering increased engagement and record seller leads. We delivered significant value to our customers through record buyer inquiry, supported by a record take-up of our depth products, and we made great progress in adjacent markets such as India, Asia, and financial services. We'll cover these highlights in more detail throughout the presentation. Our growth is underpinned by our consistent strategy, which has three key objectives. Firstly, delivering the largest audiences and most engaged consumers. You'll see in the coming slides, we achieve new records across almost all dimensions of this objective. Secondly, providing our customers with superior value again, record seller leads and buyer inquiries.
Both of these objectives are underpinned by REA's unparalleled data and insights. REA's momentum, alongside our exciting product roadmap, unique data and insights, and strategic investments, creates an excellent platform to drive future growth. I am really proud of our team's commitment throughout yet another COVID impacted half, which saw us make great progress on our strategic objectives. Today, I'll provide an update on the five key areas outlined in this slide, which will deliver our future growth. Moving to the next slide. Core to REA's success are the millions of Australians turning to realestate.com.au each month. Consolidating our position as Australia's number one address in property, we delivered unmatched audiences, including a record 145.5 million visits in October. On average, 128.8 million visits were received each month throughout the half.
That's 3.3 x more visits than the nearest competitor. I think the key metric for me is that of the 12.6 million people who visit realestate.com.au each month, 6.7 million of them are exclusive to our site. That means the only way to access this cohort is through realestate.com.au. Our app held its strong position as Australia's number one property app with an average of 59 million launches each month, up 16% year- on- year. To put our audience metrics into perspective, realestate.com.au is now one of Australia's leading digital brands with the 7th largest audience in the country. Australians continue to turn to our brand as part of their everyday lives, which reaches almost 60% of the adult population. Moving to our consumer highlights. Our goal is to convert our audience of engaged property seekers into active members.
Member profiles allow us to deliver highly personalized consumer experiences. These unique experiences, underpinned by our rich data, help deliver a 24% year-on-year increase in monthly active members. Through understanding our members, we can connect them with the right content, in the right place, at the right time to drive their property journey forward. We know that members are three times more likely to complete a high-value action, such as tracking a property. Pleasingly, we saw a 53% year-on-year increase in properties being tracked by owners in the half, and an increase of 36% of total people tracking properties. Strong consumer engagement in our data-driven experiences ultimately leads to higher quality seller and landlord prospects for our customers and finance leads for our brokers. Throughout the half, we delivered significantly more connections.
Seller Leads increased 98% year-over-year, and finance leads were up 24% year-over-year. Our integrated suite of products and services connects our customers with Australia's largest audience of buyers, sellers, and renters. Our goal is to remain Australia's first choice for digital property advertising solutions, while also helping our customers grow their business. The pleasing increase in premier depth reflects the superior value we provide to our customers and their vendors. Add-on products also experienced very strong growth with our social product, Audience Maximiser, achieving 105% year-over-year growth. This, of course, also increased the variable costs associated with this product. Agency Services offers a suite of leading digital products and services designed to help streamline customer workflows. Further value was added to Connect in the half, and engagement with the platform increased 80% in the second quarter.
In November, we added Market Insights to Connect, providing agents with unique supply and demand data to assist with their marketing. Data underpins REA's business. It delivers direct revenue through our PropTrack business and powers our consumer experiences and other products, such as a CMA product within the Connect suite of products. The 12.6 million people visiting realestate.com.au each month help provide REA with the most comprehensive data-driven view of the Australian property market. We have many other data opportunities, such as CMA products for brokers and utilizing advanced technology to deliver unique insights to both customers and consumers. Turning to financial services. As you can see on this slide, we had a strong half, driven by pleasing ongoing broker recruitment and record submissions and settlements. Graham will talk to these results in more detail later.
Good progress was made on the integration of Smartline and Mortgage Choice, which is set to be fully complete by this time next year. During the half, we announced that the combined business will be branded Mortgage Choice. We also launched a comparison experience using Simpology technology and commenced an open banking proof of concept under a new partnership with Frollo. Moving to our global businesses. India is one of the largest growth markets in the world, and our aim is to become the clear number one in digital real estate in the country. REA India made excellent progress in the market leadership battle. As you can see on the chart on this slide, housing.com has improved from third position on audience in 2018 to battling for the leadership position.
We achieved a 55% year-on-year increase in site visits in the half, with housing.com finishing on top in December with 14.6 million visits. It's a great achievement, but this race still has a long way to go. As you can see, the Indian real estate market is back at pre-pandemic levels, with both sales and launches recovering strongly in the half. Some degree of uncertainty remains with the emergence of the third COVID wave, but the strong recovery shown here suggests any impact is likely to be temporary. In addition to audience achievements, REA India realized a number of other highlights. The Housing Edge platform now offers 11 owner and tenant services, with the launch of legal services during the half.
App downloads increased 88% year-on-year and crossed the 10 million download mark in the Google Play Store in November. Ho using.com services expanded to include commercial properties in 12 major cities and a hybrid offering in new cities with a combination of on-site sales force, telesales, and self-service. REA has an 18% interest in Southeast Asian-based PropertyGuru, and I was pleased to join the PG board late last year.
In November, we divested our Hong Kong business, resulting in a singular focus on our interest in PropertyGuru. Southeast Asia is one of the fastest-growing regions globally, and on its current trajectory, is forecast to be one of the world's fourth-largest by 2030. As a strategic shareholder, REA will contribute to the next phase of growth for the PG business. As you can see on this slide, the impressive relative engagement market share in Singapore, Malaysia, Vietnam, and Thailand places PG in the perfect position to transform these markets.
In North America, REA has a 20% interest in Move, Inc., which operates realtor.com. The U.S. real estate market has recovered well from the pandemic, with existing home sales up 8.5% in 2021 and the median house price for December up 16% year- on- year. Move has delivered continued excellent growth despite the impacts of the pandemic. During the half, realtor.com continued to consolidate its position as a leading platform, with unique visitor growth outpacing key competitors Zillow plus Trulia for 23 months in a row. Alongside our growth agenda is our commitment to creating positive change through responsible business practices. REA recorded several sustainability highlights as we work towards our environmental, social, and governance goals. We achieved a 20% reduction in our carbon footprint in Australia.
Our overall employee engagement reached an impressive 87%, and we're pleased to join our leading digital peers as a member of the Tech Council of Australia in October. Before I hand over to Graham, I'll make a few comments regarding current market conditions. Australia's property market recovered strongly once COVID restrictions were lifted. Strong demand, fueled by strong bank liquidity, resulted in a healthy number of properties being offered for sale on realestate.com.au. The reduced days on market and high auction clearance rates was further evidence of the health of the market. As we commence 2022, these conditions are largely the same, despite the speculation about the timing of future interest rate increases. We do expect demand to moderate as the year progresses, bringing a healthy rebalance of the supply-demand equation. That said, buyer activity on realestate.com.au remains very healthy.
In a normally quiet month of January, we saw 125 million visits, including an all-time record rent audience. It's important to note that listing growth rates in the second half will reflect the much stronger comparatives from Q3 and Q4 last financial year. We may also see some curveballs in the coming months from COVID and the federal election, but we expect that any impact on the market will be temporary. We have real momentum behind our key growth priorities, and we've invested heavily in our product pipeline and our adjacent businesses. I'm therefore excited to announce we'll host REA's first Investor Day this coming May. At that time, you'll hear more detail from our senior executive team about our upcoming growth initiatives, and I'm looking forward to seeing many of you there.
I'll now pass it to Graham, who'll share more detail on our financial results.
Thanks, John, and good morning, everyone. REA has delivered an excellent result for the half, with revenue growth across all major lines of business. As we did at the quarter, we've provided both group core results in the ASX release for the first half and growth rates excluding the REA India and Mortgage Choice acquisitions to give visibility of like-for-like performance. In terms of the headline numbers, revenue for the first half increased 37% year-over-year to AUD 590.4 million. Operating expenses from core operations increased 54% to AUD 224.6 million. The group delivered EBITDA, including the results from our associates of AUD 368 million, up 27%. Excluding the impact of acquisitions, group revenue increased 25%, costs increased 17%, and EBITDA, including associates, increased 27%.
Our operating EBITDA margin, including the impact of acquisitions, increased to 68%, and NPAT from core operations was AUD 225.8 million, up 31%. Following the divestment of the Malaysian, Thailand and Hong Kong operations, we've reassessed our segments to be Australia, Property and Online Advertising, which will now include MyFun, Financial Services, India and our international investments being PropertyGuru and Move. Comparative historical revenue and EBITDA has been restated for the effects of the change in reporting related to MiFun and Legacy Asian businesses, and we provide a reconciliation outlining the impact of the Australian Property and Online Advertising segment in the appendix to the presentation. NPAT from core operations after minority interest was AUD 225.8 million, up 31%.
NPAT results from core operations differ slightly from reported statutory NPAT, with a number of one-off items excluded. On this slide, we provide a summary of the reconciliation between core and statutory results. Turning to our Australian residential business and trends in the market. On this slide, we've set out the quarterly changes in new buy and rent listing volumes. National new buy listings increased 17% year-over-year in the first half, accelerating from Q1 to Q2 as the market normalized post-lockdowns. Sydney listings were up 14% in the first half, with Melbourne up 43% as it cycled depressed listings in the prior period due to lockdowns. The chart showing rent listings highlights that this market remains challenged. Listings were down 11% during the half, largely impacted by a continuing lack of interstate and international migration and the absence of international students.
In terms of business performance, residential revenues increased by an impressive 31%, with strong year-on-year growth in buy revenues tempered with a flat rent result. Buy revenue benefited from national listings growth, strong growth in depth, an 8% average price rise from 1 July, and continued growth in our audience extension products such as Audience Maximiser. Rent revenue also benefited from a 6% price rise and increased depth penetration and product mix. However, this was offset by the decline in rental listings. As we provide each reporting period, the following slide shows both the penetration and mix of depth listings in the residential business and the success of our premium listing products. There's no scale in this graph, but the relativities between the categories are to scale. The first half saw continued growth in depth and Premiere penetration, with improvements across all states.
This performance has been the outcome of a very strong sales recontracting effort at the end of FY 2021, resulting in record sign-up up to the new two year contract. You can see from this chart the impact that the severe Melbourne lockdown in the first half of FY 2021 had on Premiere and overall penetration. There was a clear recovery in the second half of last year as the market reopening accelerated, and then a further uplift this half, despite Sydney and Melbourne lockdowns in the first quarter. Going forward, we'll continue to target growth in both overall depth and Premier penetration, albeit likely at a slower pace. Turning to commercial and developer. Revenues increased by 7%, with pleasing growth in commercial, partly offset by a flat developer performance.
Commercial revenues benefited from a price rise from 1 July, an increased debt penetration, with positive momentum in commercial sales listings returning, while the lease market remained sluggish. The developer business experienced a negative impact from Melbourne and Sydney lockdowns during the half, with project commencements declining by 24%. Developer revenues were flat compared to the prior year, with flow-on benefits from the strong launches in FY 2021 and extended duration offset by the reduction in the first half project commencements. The developer market is expected to be relatively flat in FY 2022, with BIS Oxford forecasting a 1% year-on-year decline in dwelling commencements. Media data and other revenue grew by 14% during the half. We saw strong growth in data, which increased 23% as PropTrack benefited from new contracts and increased valuation volumes.
Media was up 15%, with growth across both developer display and programmatic. Other revenues, which is largely flatmates.com.au, declined year-on-year, continuing to be impacted by COVID-related border restrictions. Financial services revenue was AUD 41 million, which represents growth of 24% year-on-year on a pro forma basis, assuming REA owned Mortgage Choice in the prior periods. We've seen a strong 39% increase in settlements benefiting from continued growth in our broker network and increased productivity against the backdrop of a buoyant housing market. This has been partly offset by higher broker payout ratios, which have risen due to higher settlement outcomes. REA India has delivered an impressive performance during the half, with pro forma revenue growth of 125% to AUD 24 million.
As the chart on the left-hand side shows, revenue was driven by strong growth in Housing.com's property advertising business, which saw audience growth of 55% year-over-year, taking share and outperforming competitors. Revenue has also benefited from growth in our adjacency products on the Housing Edge platform, particularly RentPay. These products come with an associated COGS, such as payment gateway costs, resulting in them being lower margin, but importantly supporting cross-sell and customer retention. As we flagged previously, REA India has continued to invest for future growth, which has resulted in an EBITDA loss of AUD 15 million for the half. This investment reflects higher headcount to deliver strategic initiatives combined with substantial remuneration uplifts as India is experiencing even tougher labor market competition than Australia. The business has also increased brand spend to support audience awareness.
During the year, we continued to increase our shareholding from 60.7%-67.9% at December, with News Corp holding the minority interest. Moving to our strategic investments. Total associate contributions were AUD 2.3 million in the first half, down from AUD 5.6 million in the prior year. This mainly consisted of our U.S. business Move, as well as new investments in PropertyGuru, Simpology, Realtair, and Campaign Agent, which were not in the prior period. Move's equity accounted contribution declined marginally to AUD 8 million. Move delivered 19% year-on-year revenue growth for the half, driven by both the traditional lead generation product, which benefited from increased yield and the referral model, which is driven by higher home prices and referral fees.
Overall, lead volumes were down 14% in the half, including down 9% in the second quarter, driven by tough prior year comparables. Move saw higher employee and marketing costs as the business continued to reinvest to drive their core businesses and expand into adjacencies. For more information on Move, please refer to the News Corp results presentation. In Southeast Asia, REA holds an 18% stake in PropertyGuru, which contributed an equity accounted loss of AUD 4 million in the first half to the group EBITDA. PropertyGuru's planned New York Stock Exchange listing is expected to complete in Q3 FY 2022, and upon listing, our holding is expected to be 15.8%. We also expect to incur a number of one-off transaction-related costs and gains with the listing, which will be reflected in our second half reported results.
On the next slide is our core operating jaws. Our jaws remained open for the half excluding acquisitions. The 17% cost growth in the first half is reflective of a number of key factors. In the prior period, we had a materially lower spend as we slowed investment in new initiatives and deferred pay rises due to COVID uncertainty. In the current period, we had higher employee costs reflecting the impact of two pay rises in January and July's pay increase, plus the impact of ramping up investment throughout calendar year 2021 as the market stabilized and with confidence to grow headcount to drive a number of new initiatives. The other key driver was COGS attached to this growth and in add-on products such as Audience Maximiser, which more than doubled and accounted for around 4% of the 17% cost growth.
Whilst this product increases the cost base, it's a high margin product that positively contributes to our strong EBITDA. Importantly, as highlighted in the chart on the right-hand side, while operating costs excluding acquisitions were up 17% in the half, they were up just 1% on the pre-COVID first half FY 2020 cost base. As we've highlighted, the group continues to invest to support ongoing growth with investment focused on a number of new products and experiences across multiple business lines. During the half, we increased the pace of our investment program as market conditions continue to improve. Depreciation and amortization is expected to increase in FY 2022 as a result of the Mortgage Choice and India acquisitions. The D&A is expected to increase from AUD 83 million in FY 2021 to between AUD 88 million and AUD 92 million in FY 2022.
Turning to our cash position, we ended the half with a strong closing cash position of AUD 195 million. The group delivered operating cash flows of AUD 213 million, which is the addition of the first four bars on this graph. During the half, we refinanced our debt facilities with a new facility of AUD 600 million, with repayment dates split over 2024 and 2025. At 31 December, AUD 414 million has been drawn, enabling headroom to finance strategic portfolio opportunities as they may arise. Finally, on current trading. New listing volumes in January were up 14% year-over-year, with Melbourne increasing 5% and Sydney up 19%.
Year-over-year growth rates are expected to slow in the second half relative to the first half as we cycle very strong prior period listing volumes, particularly in the fourth quarter. We also highlight the potential for other factors, such as the federal election and regulatory measures to slow house price inflation, which may negatively impact listing volumes. The group is targeting full-year positive operating jaws, excluding the impact of the REA India and Mortgage Choice acquisitions. Operating cost growth, excluding acquisitions, is expected to slow from 17% in the first half to high single digit growth in the second half, reflecting a more normalized prior period comparative and continued investment in growth initiatives. The group expects full-year operating cost growth of low double digits up from high single digits previously anticipated, largely reflecting an increase in revenue-related variable costs.
Lastly, in terms of equity accounted contributions, we expect positive full-year contributions from Move to be offset by losses from other new associates as they invest for future growth. I'll stop here. Operator, if we can please now open the lines for questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Tom Beadle from UBS. Go ahead.
Hi, guys. Thanks for the opportunity to ask questions and great results. Just the first question on listing volumes. I mean, I know you're cautious about the volumes in the second half, and January was obviously strong. Just could you talk to any of the forward indicators that you're seeing in your data around listing volumes that just might help us think about the near term? Just a second one, probably an easy one. Just can you talk to the impact of deferrals on your second quarter revenue? And then just finally, just on REA Connect, obviously, the trial periods have begun to end now. Could you talk about what the conversion rates for paying subscriptions has been and just what the feedback's been from agents? Thanks.
Thanks, Tom. I'll take one and three, and I'll let Graham talk to deferral. Look, listing volumes, as you saw in January, were strong. January is, you know, not typically a busy month for the property market, and you can see a sort of divergence between Sydney and Melbourne in those growth rates. I think the Melbourne agents took a longer break after an incredibly busy November and December following the lockdowns. I think the second half is gonna be a tale of two quarters. You know, if you think about what's coming, anecdotally, February and March is looking strong. You know, agents are back. They seem busy. And, you know, every agent I talk to says they've got a pretty good order book of pending listings.
As we cycle into Q4, we've got two things that are gonna impact it. First, the Easter Anzac Day period. For four days annual leave, you get about 11 days off. I think half the country is gonna be on holiday, and I don't expect anyone is gonna wanna try and sell a property during those couple of weeks. In May, we're due to have, obviously, the federal election, and we know every single federal election campaign results in subdued listings. In Q4, we're cycling against incredibly strong comparatives. I think you're gonna see quite divergent growth rates in Q3 and Q4. I think Q3 feels like it's gonna be positive, and Q4 is highly likely to be negative, you know, but only temporarily.
Any impact from that sort of Easter, Anzac Day shutdown and the federal election will be temporary, and it will be recovered in due course. In terms of Connect, the Connect sign-on has exceeded our expectations. We're way ahead of plan. In fact, we had to slow down the rollout in the second quarter because of you know, onboarding. It takes time to onboard, and we just didn't have enough people to do the onboarding. The feedback from customers using it is very positive. As those free periods start to run off, we will start to see revenue generated. As we said before, though
It'll be a while before this becomes meaningful. You know, we need strong uptake. We need people to stay on once the free periods are over. But it, you know, early signs are very good.
I'm just on deferral in the second quarter. It was a positive contribution, but not material, a small contribution, but positive.
Great. Thanks a lot.
Thank you. Your next question comes from Kane Hannan from Goldman Sachs. Please go ahead.
Morning, guys. Just three from me, please. Just firstly, commercial and developer. Just interested in your thoughts around whether, you know, the declining project launches through the first half is gonna impact that business in the second half. Secondly, India, obviously great improvement in the site visits, but just wondering what that looks like if we were to factor in the mobile app usage. I suppose how we should be thinking about the level of investment in that business as well going forward. Finally, just looking a bit further out, maybe one for the investor day, but just trying to think about the earnings in FY 2023, given you're probably gonna have what's gonna be a very tough listings comp, you know, for the year overall.
You're obviously gonna have that 6% price rise, but then it's gonna be the second year of your Premiere contract. Maybe the depth uplift isn't as much as you've seen this year. Those just interested, if you'd talk about, you know, the drivers of incremental growth in FY 2023 to offset any sort of listings normalization. Cheers.
Thanks, Kane. Look, commercial, as we said, was a tale of kind of sale versus lease. Sale was looking very good in that market, but lease was quite subdued, as you would expect. You know, office demand is quite low at the moment with people working from home. The retail sector is very, very mixed. We do expect that to recover in the second half. Developer launches, if you look at the BIS Oxford forecast, they're saying down 1% after down 24%. It implies a better second half. Talking to customers in the developer segment, they do have a good pipeline. You know, they are quite buoyant. We don't monetize until they bring them to market, though.
Their pipeline includes getting planning, getting funding, but as soon as they're ready to launch, that's when we monetize. It feels like it's gonna be a better second half than first half in terms of launches. If the government, you know, opens up immigration, foreign students, et cetera, that all underpins a better development market. In India, you saw that we had an 88% increase in app downloads in the Google Play Store. The mobile side of the business is going incredibly well as well. We don't put that sort of traffic in because we don't have our competitors as well. It's hard to give a market comparative, but we're very confident that our mobile offering is going very well. In terms of investment, you would've seen in our results that we invested heavily.
You know, we have decided we wanna be number one in India, and it's still, there's no clear winner. We've made great progress, I think, but we're gonna continue to invest until we're the clear number one. That's our primary objective in India because we think the prize is enormous. We'll see further investment in India going forward. In terms of FY 2023, wow, that feels like a long way away, but it's not. There are a few factors at play there. One is we'll be starting to get some traction from some of the newer products, both the ones that are in market at the moment, but also some that aren't in market at the moment and we can't talk about for commercial reasons. Listings will be interesting.
Don't forget in Q1, we're cycling over two lockdowns in Melbourne and Sydney. We're gonna get some very lumpy growth rates across the various quarters as we cycle over COVID and non-COVID. You know, Q1 and Q2 in FY 2023 will be very, very different because of that. We've got our price increase. I think we'll see very good contributions from India, financial services, and data. There'll be quite a few drivers of growth. Obviously, we don't give any guidance at this stage.
Thanks, Owen Wilson.
Thank you. Your next question comes from Lucy Huang from Bank of America. Please go ahead.
Good morning, Owen and Graham. Thanks for taking questions. I just have three as well. Firstly, in relation to housing.com, just following on from Kane's question around the investment, are we expecting a similar cost base that we've seen in the first half to continue into the second half, given reinvestment is going to continue? Then secondly, just interested in some of your leads metrics that you've released. Seller Leads up 98% year-on-year and finance leads up 24%. Just wondering if you can give us some color on the conversion rates for both. So how many have actually been converted successfully? Thirdly, I guess, in relation to debt uptake, it's continued to step up.
Just wondering whether this could continue to trend upwards moving into the second half, particularly given that we do have the federal election and potential impacts there.
Thanks, Lucy. I'll take the first one on and maybe pass it to you to take two and three. In terms of the level of investment in India, look, we have said that we're continuing to invest and the level of investment will be at least the same for the first half. We've made it pretty clear, as Owen Wilson said before. The aim is to get to number one, so we will continue to invest in the second half.
In terms of the Seller Leads, the conversion rate is very good. You know, I think, you know, arguably these are the best Seller Leads that our agents get in the market. You know, we've talked before, it's around about the low 30s% in terms of conversion to listing. Finance leads is harder to track because some borrowers are leads, and they're not quite borrowing ready, you know? Our brokers have to help them understand how much they can borrow and therefore find a suitable property. It's longer, some of those are longer conversions, and so it's harder to track. I can't give you an accurate number on that because some take, you know, six, some take 12 months to absolutely convert to a loan.
In terms of depth, I think you'll see more of the same. You know, the uptake in our depth offering at the end of FY 2021 was very strong. That rate of growth will continue. I don't see any impact on the rate of depth or the depth penetration from the election. If listings are down because of the election, it'll be down across all levels. I don't think the election will have any impact on that depth rate.
Thanks, guys.
Thank you. Your next question comes from Eric Choi from Barrenjoey. Please go ahead.
Good day, guys. It's Eric. Just three for me as well. First one, can I just start with the cost? It feels like nominally we're expecting costs to be about AUD 10 million-AUD 15 million higher than you previously thought. You've called out these are revenue-related costs. I'm just wondering if you can give us a sense of what the margin profile is on these. If not, maybe if you could tell us if it's you know sort of like sales commission type costs. Is it Audience Maximiser COGS? Is it in the finance segment? Just any sort of steer. Second question on depth. You know if we do the standard resi growth rate less listings less price you sort of get this balancing item for depth mix and new products of 8%.
I'm just wondering how much of this was being driven by the geographic mix because Sydney and Melbourne were punching above the national average. I guess as we moved into January and, you know, the national and Sydney/Melbourne listings growth rates have sort of come together, has that geo mix tailwind slowed as well? Last question, maybe the easiest or hardest one. Owen, you sort of said, I think positive 3Q, negative 4Q, you net that all together, what's your best guess? Do you think we can still get a positive listings growth number in second half 2022? Thanks.
Thanks, Eric. I'll take the debt and the cost. Number one and two, and pass Tom for number three. In terms of costs, look, the increase, as you said, we've gone from the high single digit to low double digit cost guidance. The increase is predominantly revenue related, which a large portion of that is COGS. The other factors in there is incentives and some other salary increases as well. As I said, large portion is COGS, and that is predominantly related to products like Audience Maximiser, as you said. There is quite a high margin on that product, so it does benefit our EBITDA.
The margin isn't quite as high as the core residential business, but it is a very healthy margin on that. In terms of depth and the geo mix that you mentioned, that geo mix hasn't had as much of an impact as it had in previous quarters and results announcements. That started to temper a bit in terms of that volatility around geo mix. The benefit from depth that we're seeing, as Owen said, is the recontracting effort from the fourth quarter coming through, as well as the market dynamics.
I'll take the listings question. As you said, it is very hard to predict, Eric. The way I'd look at it is that the conditions in the market are still incredibly good. You know, we're seeing very strong levels of inquiry and demand on our site, and I don't see that going away. The banks have still got a lot of liquidity, and so there's a lot of lending there available to sort of anyone who qualifies. Then if you think about the other drivers long term of listings, you know, you've got interest rates. Well, we're still at historic levels. Even if there is a rate increase, you know, in the second half of this calendar year, we're still gonna be very low levels historically.
If you believe the unemployment forecast might have a three in it in front of it by the end of the year, again, another strong indicator for consumer confidence, which is also a sort of influence on listings. In terms of the half, I think you know, we'll see listings brought forward to avoid that kind of holiday election period. You know, Q3 will be strong and Q4 could be negative. I think net-net, the underlying trend is for positive and therefore, you know, you could see a positive result for that total half, but it'd be small, I think.
Appreciate it. Thanks, Owen, and thanks, GC.
Thank you. Your next question comes from Darren Leung from Macquarie. Please go ahead.
Good morning, guys. Thanks for the time. Just one from me, and I know you touched on it previously before, but just on the media revenue side, obviously you mentioned that developer pipeline's looking quite strong. I think most participants in the market and the property industry are sort of expecting developer commencements and completions to sort of come off over the next 12-24 months. Does that have an impact on your media advertising and display business as well?
Yes, it does. We monetize developers in two ways, through project profiles, which goes in the developer segment, and media display advertising, which goes in the media segment. Any reduction in launches obviously has a negative impact of that. But as you saw in the half, when we were down 24%, we were still flat on revenue. We tend to get a counterbalance in that, project profiles are sold for longer and duration keeps going out. We monetize monthly on that's a good thing. Display advertising from developers was actually very healthy in the half despite lower launches because they need to advertise more to move their stock. BIS Oxford's the best lens we've got on the market.
You know, they're saying we were -24% in the half and -1% for the full year, which implies a better second half. Longer term, there are so many influences on how many projects come to market, including population growth, immigration, et cetera. You know, we've shown in the past that in weak developer markets, we still manage to do pretty well on revenue.
Understood. Thank you.
Thank you. Your next question comes from Entcho Raykovski from Credit Suisse. Please go ahead.
My first question is on costs. Obviously, you've got the change to the full year cost guidance. You've called out some of those revenue-related costs, but I'm specifically interested in whether there's been any impact from a tighter labor market. And perhaps in answering that question, can you talk about the labor market more broadly and the impact that's having on filling roles? Anecdotally, a lot of open positions right now, including at REA. I'm also just interested in whether that's allowing you to pursue all of the growth projects that you want to do right now. That's the first one.
Secondly, just from a rentals perspective, what are the dynamics that you might need to see to change for a return to growth? It seems to have been some more persistent declines more recently. Is that likely in the second half? Final one, a pretty boring one, but it looks like you've lowered some of your D&A forecasts for FY 2022. If you can just talk to the factors behind this.
Thanks, Anko. I'll take the labor market and rentals, and I'll ask Graham to cover the D&A question. Look, it is a tight labor market. You only gotta pick up any newspaper to see that. In a world where we really don't have any ability to bring talent into the country through immigration, the labor market has got quite tight. You couple that with, you know, kind of every business having growth initiatives like ours and a lot of kind of non-digital businesses having to build their digital offering in a world where people are working from home. It makes it quite tight. We are seeing pressure on wages. You know, when we hire, you know, we tend to be hiring at higher levels than for each role.
We do have vacant roles. We always have vacant roles. You know, we've grown our headcount considerably in the half to fuel our initiatives. We have a great employment brand. You know, we were rated as the fourth best place to work in the country. You know, we've got people queuing up to join REA. We had 180 new starters in the half. We also have a fantastic facility offshore through a supplier to have variable contractors. We can dial that up and down as we like. We did dial it up in the half to compensate as well. The tight labor market's not affecting our growth initiatives.
You know, it will have an upward pressure on that sort of salary rate for our staff. In terms of rentals, I think we'll have a better year this year. You know, the things that were driving it down, you know, were foreign students being able to come in. We need the borders open, not just the international borders, but the state borders. I mean, people couldn't move between states and so, you know, having to stay put basically. As movement around the country and internationally opens up, I suspect the rental market will recover this year.
In terms of D&A and look at a small adjustment, we finalized now the purchase price allocation on the acquisition. There's small changes there. Then obviously bringing the two businesses together, Smartline and Mortgage Choice and some decisions we may make around the assets. Branding and intangibles have flown into in terms of the useful lives of some of those assets as well, which has just caused a slight change as well.
Okay, great. Thank you.
Thank you. Your next question comes from Siraj Ahmed from Citi. Please go ahead.
Thank you. I'll ask three questions and I'll just ask the first one. Just Owen, any update on the Seller Leads or Agent Match product? I mean, Connect seems to be going quite well, but the Seller Leads seems to be pushed out.
Yeah, look, on Seller Leads, we've always said what we wanted to do first was build the market. I think you'll see from the numbers that, you know, consumers are now realizing that realestate.com.au is a great place to both research the market and the agents in the market, but also connect with those agents. We've changed the consumer behavior in the way we wanted. We also wanted our customers to value those leads, and they do. As I said, we have a very strong conversion of those leads, so it puts us in a really good position to bring a product to market. Obviously, you know, our customers will hear about that first, and you know, it's not far away.
Got it. Second thing, on the financial services business, pretty strongly served. It seems like the broker numbers for your the core business before Mortgage Choice has gone down. Just keen to hear what's happened there. The payout ratio increasing, is that a permanent step change or is that just because of settlement volumes?
The payout ratio is due to settlement volumes, really strong volumes. We have tiering of rates that we pay. When you get really strong volumes in particular months, you do get a slightly higher payout. It's a great position to be in. It means that our brokers are writing almost as much as they physically can. In terms of numbers, we haven't had a backwards step in broker numbers.
Got it. No, might have got it wrong. Last thing, just on looking into FY 2023, and I know it's looking ahead. So you gave your revenue expectations, right? Given the wage pressures and the fact that you're continuing to invest, how do you think about the settings, right? Is it still that it should be positive jaws or that you continue to invest irrespective of the environment?
We always have an ambition to have positive jaws. You've seen that through kind of good years for revenue and, you know, the bad year when we had COVID, that we adjust our cost base up and down accordingly. You know, we do that in several ways. You know, as I said, we've got a large number of contractors who work on our initiatives, and we can dial that up and down at a moment's notice. You know, we have the ability to manage our cost. We invest when revenue's growing strongly and we can pull it back if we have to. We're guiding to positive jaws for the foreseeable future.
Great. Thanks a lot.
Thank you. Once again, if you would like to register for a question, please press star one on your phone and wait for your name to be announced. Your next question comes from Paul Mason from E&P. Please go ahead.
Hi, just three from me. The first one just on REA India and the audience gains. I was just wondering if you could talk to sort of your beliefs around attribution between SEO and then the basic brand advertising, which is obviously like planning dollars in, and then anything to do with agent referrals or anything else driving the website, or whether it's all just like media spend at the moment. The second one was just on depth, and it's a bit of a follow-up question to Eric's question earlier. In terms of, say, the percentage change in the depth chart, does that correlate really strongly to the percentage change in, you know, number of agents that are now on a new contract versus, like, the prior period?
The last one, just, if you could give some updated thoughts on what the prospects around New South Wales stamp duty reform look like from your side 'cause obviously it's been quiet in the media for a little while now. Thanks.
Thanks, Paul. Look, in India it is a combination of SEO, so doing really well on SEO. It's been one of the benefits of REA's ownership. You know, we have a very strong SEO performance here in Australia, most of our traffic is organic, and we've taken a lot of those learnings across to India and sort of had a big uplift in our SEO performance. A lot of it is brand. You know, this is still a relatively immature market and so the COVID lockdowns, I think accelerated the move to digital in India significantly. I think our brand advertising has been very clever. You know, we've got a huge uplift, for example, you know, advertising around the cricket in India.
It's been a combination of the two. In terms of depth, it is a combination of the number of agents who signed up to higher depth products, and so that is probably the primary driver. Then you get a bit of movement depending on geography, you know, because of different depth penetration across the geographies. I'd say that the key driver there is just the number of new contracts that customers signed up to. In terms of New South Wales stamp duty, you're right, it's gone quiet. It was being led by the then Treasurer and now Premier. I think it feels like that's gonna be delayed until after the next New South Wales election cycle.
He has indicated publicly that he would like some federal government support on that, and we would hope that, you know, they can see the logic of this as well. It does feel like that's been pushed out till at least after the next New South Wales election.
All right. Thanks a lot.
There are no further questions at this time. I'll now hand back to Mr. Owen Wilson for closing remarks.
Look, I'd like to thank everyone for joining us today. You know, we had a very pleasing result for the half year. I'd also just like to pause and just pass on my condolences to Janelle and her family. It's a really tough time for them. We are a family at REA, and we feel her pain. We look forward to seeing you again and updating you at the third quarter. Thank you.
That does conclude our conference for today. Thank you for participating. You may disconnect.