This enthusiasm was initially matched by shareholders who pushed the stock up 2% during the first transactions. The rally faded, however, with the stock closing 2¢ cents, or 4%, down to 47¢.
Longer term, it’s been a tough ride for McGrath, who went public to much fanfare and with an IPO price of $2.10 in December 2015. Expected to be worth around $280 million, the stock slid in its early stages, then headed further south. He is now worth around $80 million.
I have never been so excited about our company.
— John McGrath
The worst was yet to come for McGrath after the housing market peaked in late 2017, before a prolonged downturn that helped send the publicly traded agency into a three-year losing streak, ending in 2020.
As chief executive when McGrath joined the boards, Mr McGrath then stepped down from the top job in 2016 but remained on the board as 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 after taking office.
Mr Law had joined McGrath in late 2020 as the firm’s fortunes rose amid a strengthening housing market. The company reaped the financial benefits of rising sales volumes and house prices despite ongoing COVID-19 concerns, and a year ago paid its first dividend since 2017.
But the last boom is already a memory. New challenges lie ahead with house prices in Sydney and Melbourne falling earlier than expected and signaling the start of what analysts expect to continue into a downturn over the next two years, due to rising rates and accessibility constraints.
“After careful consideration, the Board of Directors believes that John is the ideal choice for
successfully lead McGrath into its next phase of growth with continued benefits for the group,” McGrath Chairman Peter Lewis said in a statement on Friday.
“John’s passion for 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.”
In a research note published on Friday, JPMorgan economist Tom Kennedy said the deterioration in housing metrics was “most apparent” in auction win rates, which are now in the low range of 60% amid “signs of falling demand”. A 10% drop in prices is expected in the coming months.