McGrath Blames Housing Slowdown for Earnings Loss
Slowing market conditions continues to take its toll on the industry with ASX-listed real estate agency McGrath reporting losses of $1.9 million for the quarter.
In New South Wales and Queensland, McGrath’s largest markets, listings were down, dropping 6.9 per cent in NSW, while Queensland listings were flat.
Auction clearance rates and the number of properties being listed are at levels well below the previous year with sales in the Sydney, Melbourne and Brisbane markets falling 18.5 per cent, 15.8 per cent and 11.0 per cent respectively.
Despite McGrath reporting that agent numbers and listing numbers were growing quarter-on-quarter over the past nine months, properties are taking longer to transact due to the softening market conditions.
The impact of market conditions resulted in a loss of $1.9 million for the quarter ended 30 September 2018, which McGrath described as a "historically slow quarter".
“Over the financial year to date, we have seen a noticeable slowdown in the market with a correction of residential property values experienced across the entire real estate sector,” McGrath chief executive Geoff Lucas said.
“In addition the tightened lending environment is impacting current transaction volumes, however, we believe this will ultimately strengthen the stability of our property market.”
Earlier this year, McGrath reported losses of $63 million for the year to June 30 with revenue dipping 23 per cent.
The high-profile real estate agency has been hit by difficult market conditions, lower sales volumes and the departure of some key sales agents over the past 18 months.
In June, McGrath secured a significant $10.7 million investment from Chinese property giant Aqualand at an issue price of 42.5¢ per share, providing the business with additional capital.
Aqualand is now McGrath's second largest shareholder.
The company's largest shareholder is agent John McGrath with around a 22 per cent holding.
