Real estate agency McGrath Ltd, which grew revenue by 34 per cent in the 2020-21 financial year, says property sales during July and August are “well up” on last year despite lockdowns in NSW and Victoria.
Chief executive Eddie Law said both revenue and transaction volumes are outperforming budget forecasts, a situation he expects will continue across McGrath’s 107 east coast agency network.
“Our expectation was that the lockdown wasn’t going to be as extensive as it’s been, but amazingly, and I do say amazingly, the real estate sector has found a way to trade through COVID,” Mr Law said.
“And given the listings volume in evidence and given forward option bookings, there’s nothing to suggest at the moment that’s going to wane significantly.
“It might wane partially, but the expectation is that it will be replaced post-COVID.”
He said there’s increasing reluctance among vendors to put their properties on the market during lockdown.
“They’re uncertain from a COVID perspective in terms of buyer activity but what we have evidence of is the willingness of the buyer base to trade from their lounge rooms, and I think that will continue,” Mr Law said.
“What we’re doing with the reluctant vendors is asking them to prep the property in anticipation post-COVID that there’s going to be a ramp up.”
In the year to June 30, McGrath posted a net profit after tax of $19 million on revenues of $122.4 million. It paid a fully franked final dividend of 1¢ per share, bringing total dividends paid for the year to 1.5¢.
McGrath agents sold 14,459 properties through the year – 40 per cent more than in 2019-20, the back half of which was heavily impacted by COVID-19, while the average price per property rose 13 per cent to $1.168 million.
McGrath’s property management business did not fare so well, with revenue down 3 per cent to $19.9 million and listings up marginally to 7748 properties.
Mr Law said McGrath would not buy new rent rolls to boost listings and revenue and was instead trying to do property management deals with build-to-rent developers.
Company-owned office numbers also declined, from 30 to 29, and none have been added in almost a year, which Mr Law does not see as an issue even though inhouse agencies generate far more revenue than franchises.
He said there are no immediate plans to buy more, in part due to what McGrath considers to be exorbitant vendor expectations.
Franchise numbers rose by 11 to reach 78. The McGrath network now has 71 agents in NSW, 20 in Queensland, 15 in Victoria and one in Canberra.
Looking forward, Mr Law said he was most excited about the Oxygen home loans business. McGrath sold down its holding to 45 per cent in April, realising a gain of $3.1 million.
He said Oxygen has just had a record month, but did not provide supporting data, and declared it was a “golden nugget” that investors did not appreciate.
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/mcgrath-rides-property-boom-says-more-to-come-20210823-p58l2i