A not unexpected weak result from Sydney real estate agency, McGrath for the six months to the end of December, and a not unexpected weak forecast of ongoing tough property market conditions in the short term, thanks to the uncertainty caused by the NSW and federal elections.
The agency, which has been struggling now with high costs, restructurings and a weakening property market in Sydney and Melbourne especially, also warned that the second half had not started well with weaker than expected listing volumes and average sale.
McGrath reported a $2.5 million first-half loss in underlying earnings before interest, tax, amortisation, and depreciation, down on the $1.6 million loss in the previous corresponding period, but in line with a trading update issued last October.
One-off charges of $6.6 million before tax relating to legacy IT development costs and contracts contributed to an unaudited net loss after tax of $9.6 million, an improvement on the previous year’s $25.5 million loss which included a big write down.
Revenue fell 18% to $42.5 million for the half year.McGrath said that while trading in January had been in line with expectations, the first two weeks of February had been below expectations.
As a result, underlying earnings before interest, tax, depreciation, and amortisation for the second half were expected to be affected by ongoing difficult trading conditions, with external factors such as the NSW and federal elections potentially further impacting the property market, it said.
‘’Market conditions are expected to remain soft during 2019, however, there have been some signs of optimism with buyers, especially owner-occupiers who are increasingly more active as prices return to more affordable levels in many areas,’’ McGrath CEO Geoff Lucas said in a statement yesterday.
He said economic factors were contributing to a significant reduction in transaction volumes, with settled sales for the real estate sector nationally down 13.2%. Sydney was down 20.3%, Melbourne 22.3% and Brisbane 11.3% in the 12 months to January 31.
”Prices continue to weaken, with national dwelling values to January 2019 down 5.6 percent, with Sydney down 9.7 percent, Melbourne down 8.3 percent and Brisbane in line with last year.”
McGrath securities were rose 2% to 26.5 cents.