Fears of price slump greatly exaggerated: John McGrath

John McGrath has dismissed forecasts of price falls in Australia’s main markets but said good agencies would be able to cope regardless.

According to a BIS Shrapnel report from October, house prices are forecast to decline in Sydney, Melbourne and Perth in 2016/2017, while the Darwin market is expected to remain flat.

However, Mr McGrath, who is chief executive of McGrath Estate Agents, said the current price growth being experienced by Sydney and Melbourne would slow rather than reverse.

“Obviously, there will be some quarters where you will see a minor correction for a period of time, but we don’t see a growth decline on an annualised basis at all,” he said.

Mr McGrath told Real Estate Business that good agencies would be able to prosper even if prices did fall, because profitability is based on market share rather than capital growth.

“Most agents – even good agents – have single-digit market share. If the market comes back 10 per cent but an agent grows their market share from eight per cent to 20 per cent, their business is growing rapidly irrespective of the market conditions,” he said.

Mr McGrath said the strategy of McGrath Estate Agents it to help its agencies increase their market share.

“We do whatever we can to avoid any focus on external factors because we can’t change them,” he said.

“We just look at how we can get a bigger slice of the pie and help more people in their community buy and sell property.”

McGrath Estate Agents recently posted record November sales volumes of $1.27 billion – a 9.5 per cent jump on the previous best November, which occurred in 2013.

[Related: ‘Dinosaur agents’ will soon be extinct, says John McGrath]

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