London Property Sales:
London based estate and lettings agency group, Foxton’s, has reported first quarter property sales at record lows, blaming the uncertainty surrounding Brexit.
The high profile publicly quoted property group scrapped its 2018 dividend payment to shareholders as earning fell and costs rose in the period.
A sluggish property market in London is a result of declining consumer confidence over the past year, exacerbated by uncertainly over Brexit. Foxton’s is not the only large agency group to be hit: Countrywide has suffered a drastic share price fall amid a major reorganisation, while online market disrupter Purplebricks has lost its founder and CEO amid a major change of strategy, reining in its international expansion.
London’s previously bullish property market has been hit by a stamp duty increase and the traditional high street agents like Foxtons and Countrywide have seen a much more challenging environment with the advent of online agents such as Purplebricks.
Foxtons’ group revenue dropped only slightly to 23.8 million pounds for the quarter ended March 31, from the 24.5 million pounds achieved the previous year. The company reported the results were in-line with its expectations.
The International Monetary Fund has warned that housing markets in some of the leading world economies could be overvalued by up to 12%, leading to fears that a rapid correction could lead to another property slump and a recession.
USB forecasts that achieving a gradual slowdown will depend on market conditions remaining, and borrowing costs low, but there are no guarantees as central banks have already warned of higher interest rates.
According to USB, Britain has some of the most expensive property in the world, so predicts there is little room for growth, and indeed there will most likely be a fall by “low single digits” in coming months, unless there is a breakthrough with a Brexit solution.
Although undoubtedly property prices have been pushed to unprecedented highs following the financial crises, due to ultra-low interest rates and quantitative easing, cheap money has supported the market until now. Also, says USB, debt levels secured on property, compared to total bank debt, and pre-crisis levels, is at its lowest level for 17 years.