Lack of homes for sale hits profits

Countrywide, Foxtons, Savills, Martin & Co and Belvoir were among the main property firms to see their share prices fall last week amid housing market fears.

The residential property market in parts of the country is taking time to recover especially in Prime Central London, where transaction levels remain at historically low levels owing to strong recent price growth and changes to stamp duty.

Countrywide was one of the FTSE 250’s biggest fallers last week, with shares at one stage down 60.10p or 12.92 per cent to 404.90p, before later recovering to 412.79. Other listed estate agent firms also suffered, with Foxtons dropping 7p to 192.8p and Savills down 9.5p to 902.5p.

Countrywide, which saw its annual operating profits drop 11 per cent in the nine months to September compared to the same period last year, has warned that its full-year profits are set to fall below its 2014 total of £121.1million, primarily due to a lack of homes coming up for sale after the anticipated post-election recovery in residential transactions failed to materialise.

“Against the current backdrop of less than expected residential volumes, group EBITDA for the nine months to September 30 was 11 per cent below last year,” said Alison Platt (left), Chief Executive of Countrywide.

“While we anticipate modest year-on-year recovery in Q4, overall we anticipate our EBITDA for the full year will be less than the £121.1million achieved in 2014, which was the most profitable year in the group’s history,” she added.

Countrywide expects house sales volumes for the year to fall by at least five per cent year-on-year to in the region of 950,000 units, owed in part to a drop in activity levels at the higher-end of the market following changes to stamp duty rules.

Changes to stamp duty, introduced by the Chancellor, George Osborne, mean that although the majority of homebuyers will pay less in stamp duty, purchasers of properties costing more than £937,500 now pay more, primarily hitting the prime London market.

However, Platt insisted that Countrywide is continuing to invest in its underlying business to ensure “we have the foundation for future growth”.

She continued, “The economic backdrop in the UK coupled with improving consumer confidence point to modest transaction growth in 2016. With a strong residential lettings sector now forming a permanent part of the housing market, and with more customers than ever choosing to arrange mortgages through intermediaries, the outlook for 2016 is a positive one for Countrywide.”