Housing market warning bells

LISTED valuation company LandMark White, which was founded on the Gold Coast in the 1990s, has sounded a warning about the property market.

The company, which has an office in Carrara, released a market update yesterday saying it has seen a “significant reduction” in valuation instructions from first-tier lenders.

“This is a direct result of tighter regulation of credit from APRA as well as the adverse impact of the lenders reaction to the banking royal commission,” the company said in a statement to the ASX.

“The negative sentiment on housing prices across major centres has also driven weaker loan volumes and hence valuation instructions.”

However, LMW said it was not all bad news for the valuation firm.

“In previous property cycles we have seen similar periods of reduced valuation activity. These are traditionally followed by a resurgence in salesdriven activity as buyers return to market seeking undervalued opportunities, or borrowers taking advantage of refinancing options.

“Additionally, a sharper drop in property prices can lead to banks being more cautious and circumspect with their current lending portfolios, leading to increased demand for valuations.”

The company said, with the upcoming state and federal election and continued negative sentiment towards banks, it is likely volumes will remain “subdued” in the short term.

It has updated its FY19 guidance to revenue of $55 million (from $55.6m), pretax earnings of $7.1 million ($5.3m) and net profit of $2.8 million (from $4 million).

LandMark White recently completed its acquisition of Taylor Byrne via a share issue and loan of $5 million. It expects the business to deliver an increase in profit for this financial year of about $1.3 million before tax. Last year co-founder Glen White (pictured) stepped down as chairman of the valuation company.