Dashdot’s collapse has raised fears more real estate-linked firms could come under pressure, with ASIC data showing 426 insolvencies in Rental, Hiring and Real Estate Services so far this financial year.
An outspoken property advisory’s collapse has sparked fears more real estate-linked firms could falter as Labor’s investor tax shake-up hits already fragile businesses.
Dashdot co-founder Goose McGrath, not related to McGrath Estate Agents founder John McGrath, told clients the business would enter voluntary liquidation on May 28.
In an open letter, Mr McGrath said Dashdot had helped more than 1800 Australian families buy more than 2800 properties and generate more than $540m in wealth since launching in 2019.
RELATED: China-based buyer snaps up Sam Newman’s ex-Melb pad
Fitzroy pub tipped for half-price sale
Geelong Grammar lists Bostock House campus
But he said the company had been hit by weak consumer confidence, federal property tax changes, tighter lending conditions and a surge in the cost of acquiring clients through Meta advertising.
More than 40 staff were made redundant last week.
Latest Australian Securities and Investments Commission insolvency data shows there have been 426 insolvencies in Rental, Hiring and Real Estate Services firms so far this financial year.
That includes nine in NSW in May, five in Victoria and one in Queensland.
OpenCorp executive director Michael Beresford said Dashdot’s collapse was a business model warning, not proof the property market itself had broken.
OpenCorp executive director Michael Beresford said Dashdot’s collapse should be viewed as a business model warning, rather than proof the property market had broken.
“This is a business story, not a property market story, and I think it’s really important to make that distinction clearly,” Mr Beresford said.
“What we’ve seen with the news today is that there was a business model that ran into trouble.”
Dash Dot’s own statement indicated reasons for it going into administration also included changes to Meta’s advertising platform for social media, which had been a significant aspect of how they attracted clients — effectively doubling their cost of finding customers, and halving their advertising-driven revenue.
Mr Beresford said the long-term drivers behind residential property investment had not changed overnight, with immigration, housing undersupply, rising rental demand and falling home ownership still supporting the market.
Industry figures say Australia’s housing undersupply, rental demand and falling home ownership rates remain key drivers for long-term property investment. Picture: Glenn Hampson
Dashdot co-founder Goose McGrath built a major social media profile before the property advisory entered voluntary liquidation after citing Labor’s budget tax changes, weak confidence and higher advertising costs.
Mr Beresford said there was still appetite from investors seeking guidance after the federal budget’s capital gains tax and negative gearing changes.
“There’s a misconception among some that investing is dead,” he said.
“But if our levels of inquiry are anything to go by, then there’s an appetite out there for people to understand what these changes mean and where the opportunities exist.”
He said investors needed to examine the business behind the advice before signing with a property adviser or buyer’s agency.
REBAA president Melinda Jennison said affected clients should check their agreements, particularly if they paid upfront fees to a property adviser or buyer’s agency.
Real Estate Buyers Agents Association of Australia president Melinda Jennison said the collapse of one company should not automatically shake confidence in the broader buyer’s agency sector.
“I think that’s really difficult to say, because Dashdot serviced a small portion of the investment market targeting a much more affordable price point, as I understand their business model,” Ms Jennison said.
“Every business operates in a slightly different way and I wouldn’t have thought that the collapse of one business so soon after the budget is reason for consumers in the investment space to be concerned.”
Experts warned policies that scare off private investors could worsen rental pressure if fewer landlords are willing to provide homes.
But Ms Jennison said affected clients would need to check the terms of their agreements, particularly where upfront fees had been paid.
“I believe it’s going to come down to the terms of the agreement that’s been entered into with the specific agency,” she said.
Ms Jennison said REBAA members were seeing investors delay, cancel or rethink purchases after the federal budget’s negative gearing and capital gains tax announcements.
“Our members are not immune to the uncertainty that exists in the market,” she said.
Dashdot told followers in an Instagram farewell post it had carried the business “as far as we could”, with comments switched off as it worked through client updates. Picture: Instagram/@dashdotproperty
She warned governments needed to be careful about policies that discouraged private investors from providing rental housing.
“Governments need to be very careful meddling with policy changes that influence behaviour because while they’re trying to solve one problem, it can often result in a number of other problems unfolding,” she said.
Mr McGrath said Dashdot had tried to raise equity, cut costs and explore merger, sale or acquisition options before reaching the decision to enter liquidation.
Critics say Treasurer Jim Chalmers’ investor tax shake-up has landed at the worst possible time, with Dashdot’s collapse fuelling fears more property firms could be exposed. Picture: NewsWire / Martin Ollman
Dashdot co-founders Goose McGrath and Gabi McGrath built a high-profile property advisory brand that claimed to have helped more than 1800 families buy more than 2800 properties. Picture: Instagram/@dashdotproperty
“To our clients, especially those who placed your trust in us with your wealth, your future, and your family’s security: I am so sorry,” he wrote.
“You did not pay us to receive a letter like this.”
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: Portelli’s wild 22pc flex against 7-Eleven
200 Aus stores: El Jannah denies sad rumour
New Vic retail hub’s plan to stop $277m spending leak
david.bonaddio@news.com.au
Leave a comment