Foxtons saw pre-tax profits fall by 2.6 per cent in 2015 as the slowdown in the central London housing market, where prices are falling, adversely impacted on its business.
The decline in profits to £41 million from £42.1 million was in line with expectations for the FTSE 250 indexed company, which previously warned of property headwinds in the market, causing its shares price to fall.
The volume of homes changing hands in the capital fell by seven per cent in November 2015, compared with the corresponding month a year earlier, according to Land Registry figures. But the expansion of Foxtons’ mortgage broking business, which increased revenues by 31.8 per cent, helped to compensate for slower growth in income from sales as well as lettings.
But in spite of the fall in profits, group revenue was up for the year to 31st December, rising 4.1 per cent to £149.8 million, supported in part by the opening of seven new branches last year, bringing the total at year end to 58.
Foxtons plan to open a further seven offices this year, as part of a wider strategy to increase their coverage within the M25 area to 100 offices within the next five years. But the company’s heavy exposure to the London property market has affected its overall performance, with the revenue per branch falling across all their offices, down 9 per cent from £3 million to £2.7 million.
“2015 property sales within Greater London were well below levels in 2014,” said Nic Budden, Chief Executive at Foxtons.
“Activity in central London property markets has been especially constrained due to strong recent price growth and stamp duty changes, which have significantly increased the cost of moving home,” he added.
But looking ahead, Foxtons remain positive about the future, with Budden insisting that the London residential property market remains “highly attractive both in terms of sales and lettings”.
He continued, “It is too early to predict how transaction volumes may be impacted by recent changes to the tax regime and the short-term political and economic uncertainty caused by the UK referendum on leaving the European Union.”