CEO also praises NSW's stamp duty proposal
A real estate leader says the property market has already “endured the worst” of the current downturn.
John McGrath, CEO of the McGrath real estate network, said that the history of other housing downturns indicates that the current slowdown has already hit bottom.
“I’ve experienced most of these myself, but I’ve looked historically at the last nine sales corrections and most of them last less than 18 months in longevity,” McGrath told The Australian. “We think we’re certainly nine months into [this downturn], thereabouts at least. The other [metric] is severity of price correction, and interestingly enough, most of the corrections have been 10% or less in Australia. I think the CoreLogics are playing catch-up at the moment. We believe that, realistically, in the metropolitan markets of Australia – most of them, anyway – we’re at least 10%, more like 15% down from the peak. Occasionally, headlines pop out of your iPhone that say 15% more. That’s not going to happen, I think we’ve seen that.”
McGrath also praised the New South Wales government’s proposed changes to stamp duty. Under the proposal, first-home buyers would be able to choose an alternate land tax.
McGrath said the proposal will “lessen the burden” on buyers and stimulate more home purchases.
“Stamp duty is the greatest impediment of transactions at the moment,” he told The Australian. “If that lessens the burden … I think that is not only a good thing to assist us but all homeowners in NSW.”
Read next: House prices could tumble 20%
While the number of properties sold by McGrath’s company dropped 3.6% to 13,344 last financial year, the total value of the stock rose 13.9% to $19.1 billion, The Australian reported. McGrath said he was “laser-focused” on expanding the network’s 111 agencies to 250 over the next three to four years, including both company-owned and franchise offices. McGrath said the transition to a franchise model will give the company more stable and predictable income.
“We’ve thoroughly tested the theory and we think it has been well-received and will continue to be received by our key people,” he said.
The business’s full-year results, released Monday, showed an increase in both underlying revenue, which rose 1.3% to $112.4 million, and EBITDA, which rose 7.9% to $19.1 million, The Australian reported. Net profit fell $2 million to $11.7 million due to a previously disclosed one-off and significant items of around $7 million.
