Savills has warned City investors that it expects the extraordinary surge in post-pandemic housing market demand within the UK to begin tapering off next year.

But overall, the estate agency says it has experienced a strong period of trading during the second half of the year helped by the UK’s rebounding residential market.

“The continued strength of UK prime residential markets has exceeded our expectations and the anticipated tapering of market volumes in our segments is now expected to take effect through 2022 rather than significantly affecting performance in H2 2021.

“This, together with better than anticipated improvements in the UK commercial capital transaction markets, indicates that for the financial year as a whole the UK business is likely to materially exceed both our earlier expectations for 2021 and the outturn for 2019.

Lower costs

The company says it has also benefitted from lower ‘discretionary expenditure’ during the pandemic, which according to its Covid survival strategy set out in its 2020 annual report, was expected to include lower staffing costs and dividend payments, a cut in tech and IT expenditure and senior management salary deferrals.

Its latest trading update adds: “In summary, strong trading conditions in a number of our businesses and largely non-recurring cost savings indicate that, subject to the impact of further COVID related lockdowns and the pace of transaction execution in this final quarter, the Group is likely to achieve overall profits materially ahead of 2019 for the current year, before a resumption of more normalised trading and cost dynamics in 2022.”

This latest update follows its August quarterly update, which highlighted problems within the London market as international buyers and renters stayed away from the capital.