John McGrath to lead real estate agency once again, as downturn looms

Upbeat, but declining an interview on his first day as managing director and chief executive, Mr McGrath said he had “never been more excited”.

“We have an extraordinary platform and team to continue our path towards being the best residential real estate company in the country,” he said in an ASX statement.

“My plan is to continue to grow our agent productivity within our current footprint and also expand our office numbers across the east coast.”

That enthusiasm was initially matched by shareholders who hoisted the stock 2 per cent higher during early trade. By 1pm the rally was fading with the shares up 0.5¢, or 1 per cent higher, to 48.5¢.

Taking a longer view, it has been rocky ride for McGrath which went public with much fanfare and an IPO price of $2.10 in December 2015. Expected to be worth about $280 million, the stock slipped on debut and then headed further south. It is now worth about $80 million.

Worse was to come for McGrath after the housing market peaked late 2017, before a prolonged slowdown that helped send the listed agency into a three-year streak of losses, ending in 2020.

As its chief executive when McGrath hit the boards, Mr McGrath subsequently stepped down from the top post in 2016 but remained on the board as an executive director. A succession of chief executives followed, including Cameron Judson, Geoff Lucas and most recently Eddie Law, who announced his resignation in February less than 18 months into the job.

Mr Law had joined McGrath in late 2020 as the company’s fortunes were rising amid a strengthening housing market. The company reaped the financial benefits from increased sales volumes and housing prices despite ongoing COVID-19 issues, and a year ago paid its first dividend since 2017.

But the last boom is already a memory. Fresh challenges lie ahead with house prices falling in Sydney and Melbourne, earlier than many expected and signalling the beginning of what analysts expect will extend into a downturn over the next two years, driven by rising rates and affordability constraints.

“After much consideration, the board believes John is the ideal choice to successfully lead McGrath into its next growth phase with continued earnings for the group,” McGrath chairman Peter Lewis said in a statement on Friday.

“John’s passion for the business and understanding of the real estate industry is unparalleled, as is his vision and commitment to excellence in marketing, technology, customer service and transparency.”