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| London-focused Foxtons has been struggling in the sluggish property market CREDIT: PETER PAYNE |
London-based Foxtons posted a 64pc fall in profits, while Countrywide, the UK's biggest estate agent, recorded a 98pc collapse in pre-tax profits in the first half of the year.
Both companies' shares slumped in early trading, with Foxtons down 5.3pc and Countrywide, which owns brands such as Hamptons, down 9.7pc to a record low.
Foxtons said the market had been hampered by “unprecedented economic and political uncertainty" as it revealed that first-half profits plummeted from £10.5m to £3.8m in the six months to the end of June.
The decline was driven by a 29pc drop in revenue from property sales against tough comparisons from last year, when the company benefitted from a “surge in transactions” before stamp duty went up.
Meanwhile, Countrywide said its pre-tax profits fell to £447,000 in the same period from £24.3m last year, as the number of homes it sold fell 20pc compared to the same period last year. The company added that in London it was "seeing increased differences between vendors and buyers on price expectations while both groups wait to see how the political situation unfolds".
Countrywide is in the process of streamlining its business and boosting its digital offering to compete with online-only estate agents. Alison Platt, the chief executive, said she "wouldn’t describe [the 98pc fall in pre-tax profits] as dramatic," as the company's earnings before interest, taxes, depreciation and amortisation were within expectations. But she admitted: "We’re not optimistic about the housing market in the next half and our mantra has been one of self help."
She added: "We cannot sit here and say we will wait for market to come back because our view is it won’t in the next few years."
Anthony Codling, an analyst at Jefferies said: "The costs of this strategy are being felt before the benefits." He added: "We continue to believe that Countrywide is doing the right things."
Both companies' focus on lettings mitigated some of the losses felt in sales. Countrywide said that its revenue from lettings in London climbed by 5pc, while Foxtons' letting revenue fell by 2pc. There are turbulent times ahead for both as the Government introduces a ban on one-off tenant fees. When the policy was announced last year, Foxtons shares fell more than 10pc.
Foxtons said the changes to stamp duty had continued to weigh on the property market, adding that the unexpected general election had led to a “further slowing” of transaction levels in the second quarter.
It warned that it expected trading conditions to be “challenging” for the rest of the year, but insisted that London would remain a “highly attractive property market for sales and lettings”. Despite the results, Mr Codling was positive about the controversial estate agent. He said: "Foxtons is a fighter and although the results took a hit in the first half, with cash on its balance sheet it has the stamina to stay in the ring for many more rounds to come."
Foxtons reduced costs by £3.7m in the first quarter compared to the same period last year, and chief executive Nic Budden said its performance had been “resilient”.
He added: “While conditions remain challenging, we are confident that these initiatives, together with the strength of our network, our balance sheet and our brand will support long-term growth for our shareholders."
