Foxtons posts loss as homes market slumps

Foxtons has made its first loss as a public company amid concerns that an interest rate rise this week could choke what little life is left in the housing market. Nic Budden, chief executive of the estate agent, warned that the business faced a mixed outlook for the rest of the year as house sales in London continued to slow. Foxtons made a loss of £2.5million in the six months to the end of June, compared with a £3.8million profit a year previously. It is the firm’s first loss since it floated on the London Stock Exchange in 2013.

FOXTONS has made its first loss as a public company amid concerns that an interest rate rise this week could choke what little life is left in the housing market.

Nic Budden, chief executive of the estate agent, warned that the business faced a mixed outlook for the rest of the year as house sales in London continued to slow.

Foxtons’ latest accounts showed that it made a loss of £2.5m in the six months to the end of June, compared to a £3.8m profit a year previously – the first time it has posted a loss since it floated on the London Stock Exchange in 2013.

Mr Budden suggested that factors including the availability of mortgages, higher stamp duty costs and a lack of confidence in the market were holding back buyers.

Although Bank of England figures released yesterday suggested that home buyers had tentatively returned to the market this summer, the BOE is expected to raise interest rates in its Monetary Policy Committee meeting on Thursday. The move could tip the balance in the market and put property sales back on a subdued path.

A total of 65,619 buyers took out a mortgage to fund their purchase in June, the highest level since January and above the 64,990 average monthly number of transactions over the previous 12 months.

But the base rate is expected to rise from 0.5pc to 0.75pc in the first move to put rates above the emergency levels used in the financial crisis, making mortgages less affordable. Hansen Lu at Capital Economics said: “Demand is still weak, and further growth in lending will be constrained by high house prices and rising interest rates.

“As a result, we doubt that the recent upward momentum in lending will be sustained.”

Mortgage interest rates have already crept up a little, with the cost of a new loan rising by 0.27 percentage points on average since last October’s low of 1.92pc.

A more difficult borrowing environment could further cripple the estate agency world, particularly in London.

Most of Foxtons’ business is in the capital, and it warned that the property sales market in the city was “undergoing a sustained period of very low activity”, and sales were taking longer to complete.

“Looking ahead, the outlook is mixed,” said Mr Budden. “Whilst our sales pipeline has recovered to a similar level to the same time last year, the sales market remains very subdued.”

However, he said he was more confi- dent in the company’s lettings business, which was providing a more “consistent and stable revenue stream”. He added this was a market with good long-term fundamentals, particularly in London where more than a million households were now renting.

Founded in Notting Hill in 1981, Foxtons now has 67 branches in London and Surrey. In recent years, it has had to compete with new online rivals.

Shares in the company, which are down 37pc this year, closed 9.2pc higher at 52p yesterday.