McGrath has had almost a third wiped off its market value after the real estate agent downgraded its earnings outlook, citing a declining Sydney housing market.
McGrath only debuted on the local share market at $2.10 a share in December, and the stock tumbled another 40, or 30.77 per cent, to close Monday at 90 cents.
The agency said a 25-30 per cent decline in listings in Sydney’s north and northwestern suburbs in the final quarter will hit its pro forma full-year earnings by about $4 million.
The company said its pro forma earnings before interest, tax, depreciation and amortisation will now be between $26 million and $27 million, down from a prospectus forecast of $31 million.
McGrath said the slump in listings and sales started to emerge in late March, but the extent of the decline in recent weeks was unforeseen and sudden.
“McGrath has continued to experience an unforeseen low volume of listings and sales in the first half of April, particularly in the north and northwestern suburbs of Sydney,” a company statement said.
The company said the fall was in line with the market in the areas.
There has been a sharp fall in auction clearance rates in recent weeks.
Sydney recorded an auction clearance rate of 67.7 per cent last week, compared to a clearance rate of 85.2 per cent in the same week a year ago, data from APM PriceFinder shows.
Patersons Securities economist Tony Farnham said there was also concern that interest from Chinese investors in Sydney and Melbourne property markets was easing.
“Sydney and Melbourne has been the place to go and now they have topped out,” he said.
The Reserve Bank has warned that a sharp economic slowdown in China would hurt the apartment markets in Sydney and Melbourne because Chinese buyer activity was prevalent in those cities.
The RBA also warned that a wave of new apartments coming onto the market in Sydney, Melbourne and Brisbane may weigh on property prices and rents.