Foxtons blames election for slowdown in London property market
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Version 0 of 1. A pre-election lull in the property market has hit revenues and profits at London-based estate agent Foxtons, as potential housebuyers and sellers await the results of next week’s poll. The chain made revenues of £33.1m between January and March, 3.1% lower than the first quarter of 2014 when the sales market was at its strongest since 2007. Related: Just 43 homes on the market affordable for first-time buyers in London Sales commissions were down nearly 12% at £15.5m in the quarter while lettings held up with 5.4% growth to £15.9m, and mortgage broking rose 13.5% to £1.6m. Foxtons made underlying profits of £8.3m, about a quarter less than a year earlier. Nick Budden, the chief executive, said: “As expected, property sales transactions in London have remained relatively flat since the end of last year with many potential buyers and sellers apparently delaying their decisions until the outcome of the general election is known. Encouragingly growth in our letting business has continued from the momentum we saw at the end of last year.” Foxtons does not expect the market to pick up until there is “some sort of certainty” after the election. Rival company Countrywide, Britain’s biggest estate agent, warned on Wednesday that market transactions in the first six months of this year would be “significantly below” last year’s levels due to the election, but it forecast a recovery in the market in the second half of the year. The outcome of the election is uncertain, with the Conservatives and Labour neck and neck in the polls. Nate Silver, the US statistician who correctly predicted the results in every state in the 2012 US election, has forecast a “messy outcome” for the UK, which could result in a multiparty coalition. The ruling Conservative party has pledged to let 1.3 million families living in housing association properties to buy their homes if it forms a government, while Labour plans to introduce rent controls. The sudden slowdown prompted Foxtons to reduce its headcount again, after hiring more staff last year for what it thought was a “longer-term uplift”. It has not been replacing agents who left in the last few months, although that process has now stopped. The company employs 1,270 people at present. Despite the recent downturn, Budden believes the long-term fundamentals of the London property market remain sound. Many of Foxtons’ branches are now located in less central areas and have recorded better levels of volume growth recently. Foxtons, whose agents drive around in branded Mini Coopers, has continued to expand, opening five new branches in areas such as Walthamstow, north-east London, and Bromley in south-east London, increasing its network to 56 outlets. A further two are due to open this year. Shares in Foxtons rose 6% to 213p. |