One of the country’s largest real estate businesses, McGrath has predicted home price growth will bounce back after lockdowns, with the chief executive Eddie Law forecasting demand will outweigh supply in coming years.
Speaking after reporting a turnaround in earnings to an $18.3 million profit for the 2021 year, compared to a $700,000 loss in the previous year, Mr Law said he expects home prices to continue to rise at a steady rate.
The $93.4 million ASX-listed McGrath real estate business said revenue had risen by 34 per cent to $122.4 million, boosted by the strong housing market.
“I don’t think in a general sense that prices are going to grow by double digits, but they’re certainly going to remain where they are … but there isn’t enough supply to meet the demand at the moment in most markets,” Mr Law said.
Founded in 1988 by John McGrath, the business has expanded to include annuity-style income generated from a combination of property management and franchise operations, alongside the company-owned sales offices.
Mr McGrath remains the largest shareholder, alongside developer Aqualand. There are 108 offices located across the east coast.
“We note that positive market sentiment, price stability in McGrath’s key markets and strong clearance rates contributed to our sales businesses performing significantly better in FY21. Our property management business continues to contribute solid results,” Mr Law said.
The improvement in the business came from a $14 million rise in underlying EBITDA (earnings before interest tax depreciation and amortisation) to $17.7 million, which has allowed for a payment of 1¢ fully franked final dividend, resulting in total dividend of 1.5c per share, to be paid on September 21.
The underlying EBITDA result is at the top end of the guidance range provided at the company’s trading update on April 26, and excludes the $2.1 million worth of government COVID-related grants, a $2.2 million gain on the conversion of the Parramatta and Blacktown businesses to become a collective franchise, and a $3.1 million gain on the part divestment of the Oxygen home loans business.