John McGrath, founder and chief executive of McGrath Estate Agents, has issued a cautionary outlook for east coast property markets, warning of significant cutbacks amid a marked decline in property prices and sales turnover. Speaking ahead of the release of the McGrath 2027 report, McGrath highlighted the challenges facing the real estate sector, attributing the downturn in part to recent government tax changes and sustained high interest rates.
McGrath Estate Agents operates 175 offices across New South Wales, Victoria, Tasmania, and Queensland, employing around 2,500 staff. According to McGrath, the agency has experienced a 22% drop in gross income compared to the previous year, a figure he says is less severe than the 35-50% declines seen by many other firms across the industry. In response to these conditions, the company has adjusted staffing levels by shifting some employees to part-time roles and opting not to replace those who have exited.
McGrath expressed disappointment with the Albanese government’s May budget, which introduced tax reforms he believes have exacerbated market instability. “I am disappointed in what they have done,” he said, suggesting these changes have undermined confidence among property investors. He also criticized the government for failing to provide solutions for the property sector, noting that many investors are currently refraining from entering the market.
Reflecting on his political stance, McGrath revealed he had voted for the Labor Party at the last election, hoping for effective economic management, but indicated he would not support the government after the budget’s impact on the housing market. He described the budget’s effects as “horrific,” with repercussions extending beyond real estate agents to related professions such as photographers, home stylists, printers, maintenance workers, and gardeners.
Despite the current challenges, McGrath remained cautiously optimistic about the market’s future, noting that property and economic cycles historically alternate between downturns and recoveries. He forecast that the next cycle could begin before the end of the current financial year but cautioned that ongoing tax pressures and slow approval processes are stifling property growth, potentially hindering Australians’ ability to accumulate wealth through residential real estate.
Recent data presented by McGrath revealed a 10-15% decline in property prices across most metropolitan markets over the past six months. Highlighting a notable example, he pointed to a mortgagee sale in Sydney’s Tamarama suburb that sold for 30% less than its 2022 purchase price. Conversely, regional markets have largely stabilized but may face a further 7-10% price correction in the coming year. Within this segment, McGrath identified Narooma and Coffs Harbour in New South Wales, as well as Kyneton and Jan Juc in Victoria, as areas expected to perform relatively well.
Overall, McGrath cited historical trends indicating that Australia’s previous five market corrections lasted an average of 12.2 months with average price declines around 6%. He emphasized that a sustained recovery would depend on three key factors: a halt to further increases in interest rates, stable employment levels, and progress toward resolving the ongoing conflict in the Middle East.