Listed real estate agency McGrath has warned investors that its full-year profit will probably miss analyst forecasts, as it confronts an exodus of agents.

McGrath has not offered an earnings estimate for financial year 2017, citing uncertainty in the property market and very low levels of listings.

However, it said that analyst forecasts of its full-year earnings "look high" with the second half results expected to be weaker than a first half which appears likely to match expectations.

"The unprecedented low volumes of listings as a per cent of total housing stock noted in the chairman's address in November is not yet showing signs of improvement," the company observed.

Real estate analyst Louis Christopher, who runs SQM Research, said McGrath's key markets within Sydney have bucked a trend towards higher listings.

"If we look at the listing counts, for example, in the Eastern Suburbs, one of McGrath's key territories, for their reporting period we note that listings were down by some 15 per cent," he said.

"Overall, Sydney for much of last year was actually slightly up compared to the 2015 period.

Agent defection suggests growth 'difficult to achieve'

However, the more pressing problem for McGrath is an exodus of experienced real estate agents, especially from its company-owned offices.

With many of these agents either joining rivals or starting their own agencies, McGrath is set to face even stiffer competition and the risk of losing market share.

"While McGrath grew market share in two thirds of its total offices in financial year '16, we have experienced an uncharacteristically large agent churn recently, especially over the Christmas and New Year period," the company noted in its trading update.

"The departures from our company-owned offices segment suggests market share growth will be more difficult to achieve in that segment in the second half."

McGrath's company owned agencies have lost 36 agents - around 14 per cent of its sales staff.

It warns that it will take time for the new recruits who replace these agents to get up to speed, meaning it will not be able to maintain the sales volumes to meet its previously expected second half earnings.

McGrath 'nothing but a bad news story'

The ABC understands that the mass exodus of experienced agents was mainly triggered by the departure of McGrath's former head of sales Matt Lahood, who was well liked and respected within the company.

"Really the leader of the business," as one insider put it.

Combined with a plummeting share price that tarnished the brand amongst some prospective sellers and made McGrath "nothing but a bad news story", many top sales agents have moved on to what they hope are greener pastures.

There was also widespread concern about a change in advertising style, shifting away from the long-established dark blue McGrath look towards what one source said derisively, "looked like Ray White ads".

Edwin Almeida from Just Think real estate Sydney was an early critic of the McGrath float, and said many of his predictions about the company's weaknesses are coming true.

"Loyalty is a word that is not descriptive of the real estate industry, in terms of selling agents," he said.

"The trend that you see right now is compounded for McGrath agents ... the stock market price is going down and therefore they're getting a bad rap."

Property market 'overly populated by selling agents'

Mr Almeida also pointed to a general glut of sales agents in Sydney amid falling property listings.

"There's 40-50 per cent less listings in an overly populated market, when I say overly populated, overly populated by selling agents," he said.

SQM's figures suggest there are 28,000 properties currently for sale in the Sydney area.

Department of Fair Trading figures from 2014-15 show almost 22,000 people held real estate practising certificates, including 7,723 new certificates.

Even though many agents may be involved in property management rather than sales, the figures highlight just how competitive the marketplace is.

McGrath said other segments of its business continue to see "solid growth" and it opened 18 new offices (three company-owned and 15 franchises) last year, with plans to open more over the next year.

The company's shares had slumped as much as 17 per cent to a low of 71 cents shortly after the market opened, but recovered strongly by mid-afternoon to be down just 2.3 per cent at 83.5 cents.

However, the company has now lost almost two-thirds of its value since listing in December 2015 at $2.10 per share.