Foxtons swings into loss as London market weakens – Financial Times



A slowdown in London’s once red-hot housing market has placed further pressure on real estate agency Foxtons, which on Monday reported a half-year loss for the first time since listing in 2013.

The group lost £2.5m over the first six months of 2018 as fewer people looked to buy and sell homes in the UK capital. Over the same period last year, Foxtons made £3.8m pre-tax profit.

It is not the only estate agency to struggle this year. Countrywide, a larger listed rival with sales and lettings operations across the country, has also seen profits collapse.

Last month the group announced it was raising equity to reduce its debt, causing shares to fall 28 per cent.

Foxtons, which sends its sales people out in branded Mini cars, said revenues were off 9 per cent in the six months to the end of June to £53m.

The group said higher stamp duty being charged to buyers of more expensive properties and buy-to-let investors was slowing the rate at which people in London traded houses, while “affordability concerns” were also an issue.

“The property sales market in London is undergoing a sustained period of very low activity levels with longer and less visible transaction outcomes, which clearly impacts our business,” said chief executive Nic Budden.

Mr Budden said the “timing and rate” of increased selling activity in London would depend on the availability of mortgage finance and absorption of stamp duty costs, but that the group believed they would pick up “in the medium term”.

Foxtons said its outlook was “mixed”, with a subdued sales pipeline, although there was momentum in its lettings business. It would continue to review its cost base, it said.

Analysts said that the estate agency’s lack of debt and £11.8m in cash positioned it “relatively well” for any “uncertainty” in London’s housing market.

Anthony Codling, analyst at Jefferies, said that Foxtons was “down, but not out”. He pointed out that revenues and fees broadly held up in lettings.

Chris Millington at Numis said he was forecasting a small profit for the group for the full year, but at “very low levels”. “There’s not a great deal of light at the end of the tunnel,” he said.

Despite this, Foxtons’ share price rose 3 per cent in early afternoon trading. Mr Millington suggested a slight improvement in lettings revenue between the first two quarters may have comforted investors, as well as a slight recovery in the pipeline of homes “under offer” but not sold.

Mr Millington said Foxtons and Countrywide were facing trading difficulties. However, he added that Foxtons’ woes were more about the market than operational problems, while Countrywide’s issues centred on operational issues.

House prices in London last year began to fall for the first time since 2009, according to Nationwide, the lender, which also recorded a decline of 1.9 per cent during the second quarter of this year. Price growth across the UK came in at a stronger level of 2.2 per cent.