This article is from the Australian Property Journal archive
THE slowing property market has dragged down listed real estate agency McGrath, which has reported an EBITDA loss of $1.9 million for the quarter ended 30 September 2018, as settlements decline whilst days on the market rise.
CEO Geoff Lucas said in the three months ended 30 September 2018 (Q1 FY19), auction clearance rates and the number of properties taken to auction are at levels well below the previous year.
He added that there has been an increase in the level of stock currently on the market with lower buyer activity, resulting in homes taking longer to sell and price reductions across the sector.
In the 12 months to September 2018, the number of settled sales in the Sydney, Melbourne and Brisbane markets generally have fallen 18.5%, 15.8% and 11.0% respectively.
“The NSW and Queensland property markets represent the majority of McGrath’s footprint, with 83% of company owned and franchised listings occurring in these two states. Over Q1 FY19, NSW market new listings were down 6.9% while Queensland listings were flat.
“McGrath’s franchise network outperformed the market in both NSW and Queensland over Q1 FY19, with new listings down 5.8% in New South Wales and up 1.9% in Queensland,” he added.
McGrath’s listings in the Sydney and Brisbane markets have dropped further, with Sydney listings dropping 7.9% and Brisbane listings dropping 0.7% during the September quarter. McGrath’s Sydney company owned offices outperformed the market, with new listings down 3.2% and Brisbane / Gold Coast offices up 1.8% in the quarter.
Overall, the number of listings in McGrath’s company owned offices was 1,038 in Q1 FY19, up from 860 in Q3 FY18 and 808 in Q4 FY18. At the same time, agent numbers within McGrath’s company owned offices have been increasing, reflecting the successful recruitment and retention initiatives put in place, with 154 agents at 31 March 2018, growing to 157 at 30 June 2018, and 168 at 30 September 2018.
Despite agent numbers and listing numbers growing quarter on quarter over the past nine months within the McGrath network, properties are taking longer to transact due to the softening market conditions.
Average days on market for McGrath company owned offices in Q1 was 42 days, compared with an average of 34 in the FY18 corresponding period.
Days on market for the McGrath network were higher, at 54 compared with an average of 47 in the FY18 corresponding period.
Lucas said the impact of market conditions has resulted in an EBITDA loss of $1.9 million for the September quarter and he warned there could be further loses.
“Accordingly, the company expects a materially smaller loss in the second quarter of FY19.
“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.
“In addition, the tightened lending environment is impacting current transaction volumes, however we believe this will ultimately strengthen the stability of our property market. While McGrath has also been affected by this downturn, we are encouraged by our number of new listings performing better than the market, reflecting the strength of our brand, our agents’ commitment to customer service and our progress in continuing to attract and retain some of the best real estate talent in the country,” he concluded.
Australian Property Journal
