Foxtons Profit Warning: London property market cools as BBA reports Mortgage Slump
Tue 30 Sep 2014
Foxtons has reported a 'sharp and recent slowing' in London property sales this morning following a bumper nine months to June.
The estate agent also issued a profits warning and blamed the slowdown on political and economic uncertainty in Britain and Europe, tighter lending markets and mismatched price expectations between buyers and sellers.
The chain, which has more than 50 branches, said property sales commissions were 16.4million for the three months to 30 September, a fall of 7.8 per cent on a year earlier as a reduction in sales volumes more than offset price increases.
In contrast, the figure for the first nine months of the company's financial year to September 30 was 16.9 per cent higher at 54.1 million after volumes reached their highest level since 2007 earlier in the period.
Foxtons expects market volumes in the second half of its financial year will be significantly below levels seen a year earlier and that underlying earnings will be down on the 49.6million achieved 12 months ago.
Shares in the company slumped 15 per cent to around 174p today, leaving the FTSE 250 Index stock at a level well below its initial price of 230p when it floated in September last year.
It comes as research from rival estate agent Marsh & Parsons revealed a sharp drop in the rate of quarterly price growth across the capital and it predicts flat values until the end of the year.
There has been a staggering 11.4 per cent climb in Prime London property values over the past 12 months - equivalent to 163,973.
But the average Prime London property has risen 0.5 per cent in value over the course of June and September, less than a sixth of the 3.1 per cent rate witnessed in the previous quarter as growth tails off.
House price rises have been steadied by rising supply of Prime London property on the market, up 13 per cent in the last three months.
This has cooled the level of competition in the market and the number of registered buyers per available property in Prime London has fallen from 24 at the start of 2014 to 12 in September.
Peter Rollings, chief of Marsh & Parsons, said: 'We've reached a plateau in the course of house price growth, and the path paved out for London property prices for the rest of 2014 looks to be levellingoff.