- McGrath says properties are taking longer to sell due to softening market conditions.
- A home now takes an average eight days longer to sell than this time last year.
- The company announced an earnings loss of $1.9 million for the September quarter.
McGrath, the ASX-listed real estate agent, says a softer property market means it’s now taking an average eight days longer to almost eight weeks to sell a home than this time last year.
The company announced an unaudited EBITDA (earnings before interest, tax, depreciation and amortisation) loss of $1.9 million for September quarter.
And McGrath says it expects another loss in the second quarter.
In a trading update, the company says buyer activity is lower, auction clearance rates are down and there has been an increase in the level of stock currently on the market.
According to industry analysts CoreLogic, Sydney’s median price has fallen 6.3% over the past year and Melbourne 4.2%.
Auction clearance rate data shows only around half of all properties going under the hammer are selling at auction.
Average days on market for McGrath company-owned offices in the September quarter was 42 days, compared with an average of 34 in the same three months last year.
For the McGrath network as a whole, average days a property was on the market was 54 compared with an average of 47 the year before.
In the 12 months to September 2018, the number of settled sales was down 18.5% in Sydney, 15.8% in Melbourne and 11% in Brisbane.
McGrath says the September quarter is a historically slow one for the company.
The company expects a materially smaller loss in the second quarter of 2019.
“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,” says McGrath CEO Geoff Lucas.
“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.”
McGrath in August posted a $63.1 million full year loss, hit by difficult market conditions, lower sales, and the departure of some of the real estate agency’s sales agents. Revenue was down 23% to $99.2 million but underlying EBITDA of $5 million hit guidance.
Agent numbers at McGrath’s company-owned offices have been increasing with a total of 168 at the end of September 2018, up from 154 at the end of March.
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