Foxtons hails recovery in UK property market

The UK property market has bounced back sharply, according to estate agent Foxtons, with lettings almost at pre-crisis levels and sales well up on April and May.

Activity dropped heavily during the peak of the coronavirus crisis as estate agents shut their offices and social-distancing measures made physical viewings impossible.

But London-focused Foxtons on Tuesday said that the market had recovered quickly in June and July.

“Behind the fog of Covid there is still great appetite in the property market,” said Foxtons chief executive Nic Budden, who added that he was “cautiously optimistic” for the rest of the year, with low interest rates and the stamp duty holiday helping to sustain demand.

He believed that the market, which has been subdued since the Brexit vote, still had “significant upside in recovery”.

Column chart showing year-on-year % change in Foxtons' lettings commissions

Foxtons reopened its offices in June and has restarted viewings, although its agents still cannot transport customers in its distinctive green Minis. “It’s a wrinkle we’re trying to iron out with the government,” said Mr Budden.

His comments came as Foxtons reported its results for the first half of the year. Revenues dropped 22 per cent to £40m as the crisis bit into both lettings and sales. The pre-tax loss widened from £2.5m to £4.3m.

Almost two-thirds of the company’s income comes from lettings, which is less cyclical than sales because it includes regular fee income.

Foxtons’ lettings commissions are now just 3 per cent below where they were this time last year. At the peak of the crisis, commissions were 45 per cent down. 

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In May, sales commissions were 61 per cent down on the same month last year but this month they had improved to 32 per cent down on July 2019.

“We were able to weather the storm better than expected,” he said. “Many of our competitors shut up shop and literally put their phones on voicemail.”

Chris Millington, an analyst at Numis, said that Foxtons’ results were “a resilient performance in light of the challenges it faced”.

The company’s shares rose 3 per cent to 38p on Tuesday morning in reaction to the numbers, but are still 45 per cent down on their position in January.

Foxtons raised £22m in a share placing in April, and ended the period with £40m of net cash.

“We don’t think it is sensible having lots of debt in a cyclical market like ours,” said Mr Budden. “We’ll always be relatively conservative on the balance sheet. Normally I’d want £10m to £15m of cash. Today I’d like a little bit more.”

He said that the cash would enable Foxtons to invest in technology and also buy books of lettings business from rivals. “Now is a good time to buy as valuation levels are pretty low.”



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