Larry SchlesingerReporter

Mar 2, 2020 – 4.50pm

Listed real estate group The Agency says homebuyers are more worried about rising house prices than they are about the coronavirus.

After reporting a 41 per cent rise in properties sold for the six months to December, managing director Paul Niardone said there had been no reduction in attendance at auctions or open homes hosted by the group’s 278 real estate agents since the spread of the epidemic.

“We’re seeing none of that slowdown,” Mr Niardone told The Australian Financial Review.

“East Coast auctions have been pretty busy. People are more worried about getting into the market before prices rise further then the coronavirus,” he said.

Sydney house prices increased 1.7 per cent over February with a 1.2 per cent gain recorded in Melbourne and 0.8 per cent in Canberra and Hobart, according to CoreLogic’s Home Value Index released on Monday.

But while the likes of AMP Capital chief economist Shane Oliver warned the virus posed a “big and rising risk to the property market outlook” Mr Niardone said The Agency was keen to grow its presence in Melbourne and expand into new markets, including Brisbane and Adelaide.

The group reported a more than doubling in revenue to $25.2 million over the six months to December compared to $10.5 million.

Mr Niardone said 70 per cent of this growth was due to its acquisition of Top Level Real Estate on the East Coast, which was completed in January 2019 and 30 per cent due to organic growth from a rising level of market activity.

For the half-year, The Agency Group reported pre-tax earnings (EBITDA) of $533,000 compared with a loss of $1.55 million in the prior corresponding period.

It’s loss after tax came in 14.5 per cent lower at $1.67 million.

Listings rose 87 per cent to almost 2000 with sales up 41 per cent to almost 1500. Over the six months to December, The Agency sold $1.5 billion of property, up 23 per cent on the prior period.

Despite this growth, audit firm Bentleys, again expressed concerns about the ability of the group to continue as a going concern.

Not only did The Agency experience a half-year loss, but it also had a net cash outflow of $1.46 million from operating activities over the six month period and had working capital deficit of $18 million as of December 30 with current assets of $9.5 million and current liabilities of $27.5 million.

Its current liabilities include a $12 million Macquarie Bank finance facility inherited from the takeover of Top Level Real Estate. This is due and payable at the end of March.

“The ability of the group to continue as a going concern is dependent on it refinancing Macquarie Bank finance facility, generating profits and positive cash flows and in the event these are not achieved, raising capital from equity markets,” notes to the accounts say.

Mr Niardone said the group would make an announcement about refinancing of that debt in the coming weeks.