Foxtons racks up losses as London property market stagnates amid higher stamp duty and house prices
- Foxtons swung to a £2.5m loss, compared with profits of £3.8m last year
- Sales slumped 9% to £53m in the estate agent’s first half, after sinking 15% in Q1
- Boss Budden blamed stamp duty and price houses for a market slowdown
Foxtons became the latest firm to bemoan a slowdown in the UK property market today.
The London-focused estate said stagnating homes sales in the capital caused it to slump to a £2.5m half-year loss, compared with profits of £3.8m this time last year.
The market, which Foxtons boss Nic Budden described as ‘very subdued’, also triggered a 9 per cent crash in sales to £53m over the six months to July.
Budden blamed a number of factors, including ‘higher stamp duty affecting buyers of more expensive properties, second home owners, and buy to let investors’.
Foxtons has around 70 estate agencies in and around London for both lettings and sales
He also pointed to ‘ongoing affordability concerns’ which he said are ‘particularly acute’ in London.
As a result, the firm scrapped its interim dividend, having handed investors 0.43p per share a year ago.
A slew of estate agents and housebuilding firms have felt the pinch of the market slowdown in recent months.
Countrywide flagged ongoing subdued conditions in June as it issued its fourth profit warning in eight months, while house builder Berkeley warned of dwindling demand in London, despite profits rising.
Foxtons warned previously of the ‘very challenging’ trading conditions when, in its first quarter, sales plummeted by nearly 15 per cent to £24.5m.
None-the-less, the firm hailed strong growth in its lettings market today as demand for rental properties remains sky high.
Investors did not seem rattled by the news; the company’s share price rose in early trading and, at time of writing, were up nearly 7 per cent at 51p.
‘The one saving grace for Foxtons is a very solid balance sheet, which provides the capacity to ride out the soft market conditions, at least for a time,’ said AJ Bell investment director Russ Mould.
‘However, the losses the company is beginning to rack up are having an impact. The net cash position fell from nearly £19m at the beginning of the year to just short of £12m at the end of June.
‘Foxtons needs market conditions to improve, and soon.’