Foxtons hit by cooling London housing market
ESTATE agency Foxtons yesterday warned on future earnings, as the firm fell prey to London’s property market slowdown.
Third quarter property sales commissions were £16.4m, down from £17.8m in the same period last year, according to the firm’s interim management statement.
The sales figures mark a fall of 7.8 per cent year-on-year in the third quarter. The company’s share price fell 16 per cent on the news.
Property prices had boomed over the last year, especially in London. However, the company said that reductions in volume more than offset rises in prices.
The company expects the market to be constrained for some time due to political and economic uncertainty in the UK and Europe. However, it maintains a positive outlook for the longer term.
“The deterioration in market conditions reflects the reduction in buyer demand, which seems to be driven by high asking prices, uncertainty ahead of the election and some impact from the Mortgage Market Review,” said stockbrokers Numis.
Numis downgraded its forecast for earnings before interest, tax, depreciation and amortisation (Ebitda) for 2014 and 2015 by 16 and 19 per cent respectively.
“Foxtons remains highly profitable, cash generative and debt free, and therefore well positioned to deliver further cash returns to shareholders, building on the £28.1m of ordinary and special dividends paid since our IPO,” said Nic Budden, Foxtons’ chief executive.