London estate agent Foxtons hammered by downturn in UK capital

Company reports loss before tax of £2.5 million (Dh12m) compared with profit of £3.8m a year earlier

Estate agents boards are lined up outside houses in south London June 3, 2014. Britain's house prices rose at their fastest annual pace in nearly seven years last month and signs of bottlenecks in the construction sector underscored the upward pressures on the market, surveys showed on Tuesday. House price growth picked up to an annual pace of 11.1 percent in May, mortgage lender Nationwide said, fanning concerns that the property market could be overheating.  REUTERS/Andrew Winning   (BRITAIN - Tags: POLITICS BUSINESS REAL ESTATE) - RTR3S0I0

Four years ago, Foxtons Group was riding the crest of London’s housing wave as surging demand sent home values in the UK capital soaring.

Since then, the estate agent’s share price has fallen by almost 90 per cent as the city’s residents and landlords hold off on buying homes, while overseas demand remains dampened by a series of tax changes. That’s leading the firm, best known for its Mini-driving brokers, to prioritise its rentals business, said chief executive Nic Budden.

“The property sales market in London is undergoing a sustained period of very low activity levels with longer and less visible transaction outcomes, which clearly impacts our business,” Mr Budden said on Monday. “After a slow start to the year, performance in our lettings business improved throughout the period, delivering another consistent result for the first six months.”

The company reported a loss before tax of £2.5 million (Dh12m) compared with a profit of £3.8m, a year earlier.

Foxtons’ shares rose 5 per cent as of 10:18am in London, giving the company a market value of £138m. The stock has declined 39 per cent this year.

Revenue fell 9 per cent to £53m in the six months to June 30, with sales revenue down 23 per cent on fewer transactions.

The company also warned of a mixed outlook looking ahead.

"Whilst our sales pipeline has recovered to a similar level to the same time last year, the sales market remains very subdued with less visibility on exchanges proceeding," said Mr Budden.

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Last month, Britain's largest estate-agency group Countrywide issued its fourth profit warning in eight months and said it planned an equity sale, as transactions were taking longer to complete.

There are few signs the London market will improve in the short term. The number of people looking to buy was flat in June, according to the Royal Institution of Chartered Surveyors (Rics). More homeowners are looking to offload their properties just as sales and values decline, making it more difficult to secure deals, which are at a near decade low.

“Buyer uncertainty continues. Downward price adjustment having little or no effect,” James Gubbins, a broker at Dauntons in the district of Pimlico, said in a survey by Rics published earlier this month.

Foxtons’ letting business was less hurt by the property malaise. Revenue from the rental business fell 1 per cent in the first half compared with a year earlier, and the firm views the unit as a source of reliable income in the future.

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