McGrath Limited has downgraded its profit forecasts for 2016 by up to 16 per cent, sending its shares plunging 30 per cent lower.

The move comes just four months after the company listed on the share market at $2.10 — it has lost 57 per cent of its listing value, closing at 90 cents.

The Sydney-based real estate giant is now expecting pre-tax and interest earnings of $26-27 million for the current 2016 financial year.

That is down from a prospectus forecast of $31 million when it listed in December, which was reaffirmed at its first profit results as a listed firm in February.

The company has offered no profit guidance for 2017, citing "current industry volatility".

Property listings slump by a quarter in northern Sydney

McGrath said the shortfall in expected earnings has been swift, and is due to an unusually low number of listings in the north and north-west suburbs of Sydney, especially in the first-half of April.

The company is now expecting north and north-west Sydney listings to be 25–30 per cent lower than prospectus forecasts.

These areas are managed by agencies that were part of the Smollen Group of franchises, which was bought out by McGrath as part of its float.

"The company believes the fall in listings in the north and north-western suburbs of Sydney is in line with the market in those areas," it noted in the ASX release.

However, the managing director of SQM Research, Louis Christopher, noted that listings in Sydney had actually risen about 14.7 per cent over the past 12 months.

"It is a little surprising that they would point to that as a single reason for their downgrade, particularly in light of the fact that listings are definitely up in Sydney," he said.

"It must be said too though, we have been recording falls in Sydney's east year-on-year. It's one area where the market still seems to be rather strong and we do know that McGrath has significantly more market share in Sydney's east."

Drop-off in Chinese buyers hits revenue

Another factor cited by McGrath for its profit warning is a continued drop-off in the number of Chinese buyers in north-west Sydney.

That tallies with what Mr Christopher has heard about the market.

"Anecdotally, we've definitely been hearing from multiple sources on the ground that the level of demand from Chinese foreign property investors has fallen, especially compared to this time last year when it was running rather strong," Mr Christopher said.

"Certainly the areas that have traditionally been the hotbeds of foreign property activity would be feeling it most — that would certainly be parts of the inner-west, parts of the east, parts of the lower and upper North Shore."

That fall in listings and foreign buyers has caused McGrath to lower its outlook for residential sales and led to a sudden downward revision in revenue forecasts of between $1-5 million, and the profit downgrade.

It has also prompted McGrath's directors to foreshadow a 22-33 per cent cut in the target dividend for this financial year to between 3-3.5 cents.

Macrobusiness property analyst David Llewellyn Smith told ABC News on Saturday that the float had largely been an exercise in the existing owners cashing out by selling a large part of their stake to share investors.

"The structure of it raised $140 million and most of it walked straight out the door with the owners so you could ask the question whether the business is sufficiently funded to pursue its expansion plan," he said.

'Looks like a re-run of the 2003 boom and bust'

It also seems that the north and north-west are not the sole extent of McGrath's problems, with ABC News visiting a launch of off-the-plan inner-city Sydney apartments conducted by McGrath over the weekend which flopped.

"We were expecting more [people/buyers] - there's a bit of uncertainty in the market and that might have something to do with it," said agent Paul Tutt from McGrath Projects.

"We've had quite a few people through here today who are sitting on their hands and waiting to see what will happen."

Sorry, this video has expired The dark side of the housing boom ( Michael Janda )

Mr Llewellyn Smith said the decline in listings, sales and interest is a sign of what was an overheated Sydney market now rapidly cooling.

"At this stage it looks rather like a re-run of 2003, of the boom and bust which took roughly ten years to play out," he said.

"But of course then we had the mining boom which prevented the Sydney market from falling really far, but this time the mining boom is in reverse so all bets are off."

McGrath's business is heavily concentrated in Sydney, with its other main areas of operation being south-east Queensland and the ACT.

John McGrath has so far declined several invitations to be interviewed by the ABC about the performance of the real estate empire he founded since it listed in December.

The more than halving of McGrath's share price in around four months has also cast doubts over the future of a proposed float of rival LJ Hooker, a decision on which keeps being delayed.