- McGrath cites unprecedented low volumes in new listings
- Expects H2 results will be weaker than H1
- Shares drop 17 pct to record low at one stage, last down 5 pct
(Recasts, adds comment from property valuer and data)
McGrath Ltd (MEA), Australia's only listed residential realtor, warned annual profit would fall below analysts' estimates, hit by what it called an unprecedented dearth in home listings and stoking concern that the perennially buoyant market is peaking.
Shares at one point slid to a record low as McGrath also noted its pain had been exacerbated by an unusually large number of sales agents quitting - 36 out of roughly 260 - extending a difficult run for the company that has never seen its stock trade at its December 2015 issue price.
Australia's housing market has climbed for five consecutive years to become one of country's strongest business sectors, making the question of when will it peak a huge subject of national debate amid fears that any sharp declines will batter the economy.
While home prices last year rose the most since 2009, new listings by volumes are currently down by a quarter from a year earlier, according to property consultancy CoreLogic. It says the market was worth some A$6 trillion ($4.6 trillion) as of mid-2015.
"The low listings is classic of the top of the cycle, when the sellers say 'why would I sell?' and greed holds them in there, and the buyers baulk at the prices," said Gavin Hegney, a property valuer and analyst at Gavin Hegney Property.
McGrath said that although early indications suggested earnings were in line with analyst forecasts for the six months to Dec. 31, full-year estimates looked high.
Analysts had predicted McGrath would report a net profit of A$11.6 million for the full year, down 20 percent from 2016, according to Thomson Reuters I/B/E/S.
The company offered no explanation for an "uncharacteristically large agent churn" over the Christmas period but noted that it recently began offering more compelling remuneration for high performing agents.
The company plans to recruit new agents but added that "the usual time for an agent to become fully productive means these new agents will not match the volumes required to maintain our previously expected second-half earnings".
McGrath shares fell as much as 17 percent although they later pared losses to be down 5 percent at A$0.81 in late afternoon trade. That is, however, still less than half its issue price of A$2.10.
The company, which has not issued its own forecast for 2017, reports first-half earnings on Feb. 23. ($1 = 1.3233 Australian dollars)
