Capital’s housing market slowdown hits Foxtons
FOXTONS will this week say its profits almost halved in the first half of the year, as the upmarket London estate agent bore the brunt of stamp duty increases and the uncertainty preceding the Brexit vote.
Profits for the six months to the end of June are set to come in as low as £12million, according to broker Numis, compared with £20.5million for the same period in the previous year.
Shares in the estate agent have fallen 30 per cent since the referendum result, amid fears of a dramatic slowdown in the capital’s housing market. Foxtons issued a profits warning shortly after the vote, saying that the run-up to the referendum had led to ‘significant uncertainty across London residential markets’.
It said: ‘While it is too early to accurately predict how the London property sales market will respond, the upturn we were expecting during the second half of this year is now unlikely to materialise.’
Some have suggested that the sharp drop in sterling as a result of the Brexit vote could boost central London housing by drawing in foreign buyers.
But experts also expect a decrease in the number of transactions, which will hurt estate agents.
Analysts at investment bank UBS believe that the number of housing transactions in London will be 6 per cent lower in 2016 than they were in 2015, and will fall a further 10 per cent in 2017. They also expect prices to fall 10 per cent over the next 18 months.
However, they were upbeat on Foxtons long-term strategy of expanding throughout the capital and further afield.
The UBS analysts said the move would ultimately pay dividends, adding: ‘Our analysis shows that strong house price growth and transaction volumes in outer London boroughs have made these locations increasingly attractive for Foxtons.
‘Our research highlights 41 potential additional Foxtons branches within London boroughs, and we foresee branch numbers increasing from 58 in 2015 to 87 in 2020.’