Real estate agency network McGrath says the heat has come out of Australia’s property market, but that demand is still strong while prices are growing at single rather than double-digit rates.
McGrath posted underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $10.6 million for the six months to December 31, 2021 – an increase of 60 per cent over the same period in 2020.
But the first half of the 2021 calendar year was stronger with underlying EBIDTA at $11.1 million, revealing the impact COVID-19 lockdowns along the east coast had on momentum later in the year.
“The half was slightly impacted by the lockdowns particularly in October and November when we were slightly compromised, but we certainly had a good December to come back,” said chief financial officer Howard Herman
Chief executive Eddie Law said January was relatively quiet, but listings are on the rise.
There is “positive growth in all markets”, with Brisbane the star performer.
“The agents are staying there’s more stock coming back and that the stock continues to be absorbed relatively quickly,” Mr Law said
“Brisbane is exceptional at the moment because it started later, as it tends to do.
“Sydney and Melbourne have come back to mid to high single-digit [growth] figures as opposed to the 20 per cent or more experienced over the prior 12 months.”
He said this is a good thing.
“We didn’t want and couldn’t afford a double-digit increase in these markets because it goes to affordability,” Mr Law said.
“We went up in the elevator, but you want to come down on the escalator, and that’s what we’re doing.
“I think the market is progressively making its way to sustainable growth. And provided sustainable growth is above inflation, which itself is a concern, I think you’ve got a healthy market.”
There’s no reason think prices will go backwards, he said.
“I don’t see a diminishing in the average selling price, I don’t see what could cause it,” Mr Law said.
“We’ve got very, very low unemployment and there will be interest rate rises but not to the extent that they will stop the activity in the market, I think it will normalise it.”
McGrath’s net profit came in a $6.9 million for the period, $1.2 million less than the previous corresponding period which was inflated by abnormal items including the sale of its Parramatta office and JobKeeper payments to staff.
It is paying a one-off special dividend to shareholders of 1.5¢ per share in addition to an interim dividend of 1¢ per share.
Mr Law also announced a $2.5 million share buyback program starting on March 28 which will run for a year.
Article Source: www.afr.com