(Reuters) - Real estate classifieds company Domain Holdings Australia Ltd said it saw signs of a market turnaround as it posted a 29.3% fall in annual underlying profit on Friday, hit by lower listing volumes amid a sharp property downturn.

Underlying net profit after tax for the year ended June 30 fell to A$37.4 million ($25.3 million) from A$52.9 million a year earlier, the company said. Underlying revenue fell 6% to A$335.6 million.

Domain shares dropped 2.1% in early trade while the broader market was little changed.

New listings declined about 12% nationally, pressured by a drop in auction volumes in Sydney and Melbourne, Domain said.

Stricter lending rules, higher property taxes on foreigners and an apartment glut have led to the steepest price drop in the Australian property market in a generation.

However, the company said it had seen some "encouraging signs" of buyer activity in the first weeks of fiscal 2020.

Australia's housing market has shown early signs of improved buyer confidence at property auctions, according to data released by a major analysis firm last month, helped by the country's central bank interest rate cuts.

($1 = 1.4765 Australian dollars)

(Reporting by Shreya Mariam Job in Bengaluru; Editing by Arun Koyyur and Stephen Coates)