Sales take a hit as London property market cools
Profits at Foxtons have slumped as the estate agent blamed a ‘significant fall in sales volumes’ for dragging on revenue.
London’s property market has cooled in recent months, with prices slowing and fewer homes hitting the market. Changes to stamp duty have severely damaged the market for £1million plus homes in the capital.
Chief executive Nic Budden previously pinned a slowdown in residential property markets on uncertainty surrounding brexit.
Now he has described 2016 as a ‘challenging year’, warning: ‘Should current levels of sales activity continue in the short term, it is likely that 2017 volumes will be below those in 2016.’
In its trading statement the group said sales for the year ended December 31 came in at £133million, down from £150million in 2015. As a result, earnings for the period are expected to have plummeted 45 per cent to £25million. In the final quarter of last year, revenues were £26million, compared with £35million in the same period in 2015. Its official audited results for the year will be released on 8 March.
In the statement, Foxtons added: ‘The reduction in group revenue for the year reflects the significant fall in sales volumes immediately following the first quarter of 2016.’
However, lettings revenues in the fourth quarter proved more resilient, coming in flat at around £13million, driven by high levels of renewals. Lettings comprise more than half of group revenues.
Budden said: ‘Our balanced business model provides resilience against sales market cycles and we have a strong balance sheet with no debt.
‘Our high-touch approach to customer service continues to be a key differentiator and as the most recognised residential brand in London, we are uniquely positioned to manage through the market uncertainties and take advantage of any change in conditions.’
Shares in Foxtons have plunged 5 per cent this session to 93p.
Chirs Millington, analyst at Numis, explained: ‘These figures highlight the high operational leverage in the business and the exceptionally low levels of activity in the London market.
‘Foxtons state if the current level of sales activity persists in the short term, it is likely 2017 volumes will be lower than 2016.
‘Clearly the outcome of the year will be predicated on the performance of the London sales market, but in the meantime Foxtons remains in a net cash position and it seems to be performing well on listings volumes.’