After a downturn in London property market and a profits fall for estate agents Foxtons, they see no upturn in the market until after the general election in May.
Foxtons chief executive, Nic Budden, told The Guardian newspaper that “2014 was a year of contrasting halves for property sales.”
The London-based agency had hired extra staff early last year in anticipation of increased sales in the frenzied property at that time. However, a dramatic slowdown in the second half of 2014 has prompted it to cut between 50 and 60 jobs. The cuts affect around 7% of Foxton’s workforce.
Foxtons’ chief executive, Nic Budden, had told industry analysts:
“We saw very significant activity in the market during the first half of 2014. We had already used up excess capacity in the business in 2013. We began to recruit for what we thought was a longer term uplift and as the downturn came we were a little bit overstaffed and we reduced that overstaffing.”
The Foxton’s move, with their sharp-suited young agents, renowned for their aggressive sales tactics, liveried Minis and high commission rates will probably attract little sympathy from clients.
According to The Guardian newspaper, Foxton’s employees are encouraged to “live on their wits and have little security from the outset.” New agents are given the use of a boldly painted Foxtons Mini and can choose to earn a £10,000 salary, which is less than the minimum wage, plus 10% commission, or a £17,500 salary plus 5% commission.
Group earnings before interest, tax, debt and exceptional items fell by 6.9% to £46.2m in the year ending 31 December.
This figure was roughly in line with analysts’ average forecasts. Pre-tax profit rose 8.2% to £42.1m.
Foxtons blamed much of the market slowdown on wariness among buyers and sellers created by the approaching general election.
Budden told The Guardian:
“We see the sales market remaining somewhat constrained until at least after the general election and even then we will need some certainty and clarity in the market before we can predict with any level of certainty where volumes are likely to move in the market.”
With polls indicating another coalition government and Labour threatening a Masion Tax, Foxtons thinks it may take a while for buyers and sellers to feel confident about the ultimate direction of government policy.
Foxtons, which listed on the stock market in September 2013, saw its shares go from its shares at 230p to 399p by the end of February 2014 as activity in the London housing market hit fever pitch. Since then the shares have roughly halved trading at 193p today, Friday.
Dramatic Slowdown in the Second Half of 2014 has Prompted Foxtons to Cut around 7% of it's Workforce – http://t.co/8hys1vcnVx
— LandlordZONE (@LandlordZONE) March 13, 2015