Foxtons' property sales tumble by a third as London house buying cools

by Kate Palmer, Business Reporter
October 19, 2016 09:30 AM

Foxtons issued a profit warning in June, blaming uncertainty following the EU referendum

Foxtons’ property sales have plunged by a third in just three months as London homeowners shy away from transactions in the wake of higher stamp duty rates and fears over the Brexit vote.
The estate agency, which blamed a profit warning in June on the EU referendum, said revenue from property sales dropped 34pc in the three months to September 30 to £12.2m as it contended with lower transactions in the capital.

Higher rates of stamp duty, announced by the former Chancellor George Osborne last year, took effect in April, adding a 3pc surcharge on second-home buyers and buy-to-let investors.

It has hit London property owners in particular: average prices in the capital have now reached £489,000, compared with a country-wide average selling price of £219,000 in August 2016.

“We have built Foxtons to withstand sales market cycles,” said Nic Budden, chief executive. “The long-term fundamentals of the London property market remain very attractive and represent a huge opportunity for growth.”

Foxtons, which relies on its central London offices, also clocked lower demand from tenants but said its lettings division, which makes up more than half the business, helped buck the decline in property sales. Overall, the FTSE Small Cap group said revenue fell 14pc to £37.5m throughout July to September.
Despite worries that Brexit would hit the London property market, house prices continued to soar following the EU referendum in June. Prices increased 12.1pc in the capital in August, outpacing the annual rate of growth of 8.4pc across the country, according to the Office for National statistics.

However, some observers argue that the impact of Brexit is yet to affect official transaction figures, as sales can take several months to complete.

Foxtons insisted it would hit full-year sales and profit forecasts. Analysts currently predict the estate agency, known for the branded Minis driven by its agents, will post slightly lower sales of £145.2m in 2016 and profits of £27m, down from £41m the previous year.

Foxtons’ shares remained buoyant in morning trading, rising 1.5pc to 96p. But they remain 42pc below their level before the June 23 referendum.

http://www.telegraph.co.uk/business/2016/10/19/foxtons-property-sales-tumble-by-a-third-as-london-house-buying/