The London estate agent Foxtons slumped to its first annual loss since its stock market debut six years ago, blaming a further fall in the number of homes sold and warning of a prolonged downturn in the capital’s property market.
Foxtons, known for its hefty commissions and fleet of Mini Coopers, said low consumer confidence because of Brexit uncertainty, the impact of higher stamp duty introduced in 2016 and low affordability in London after years of rapid house price growth were all weighing on the market.
Nic Budden, the chief executive, said: “2018 was one of the toughest sales markets we have ever had in London, with transactions falling from [the previous] year’s historically low levels.”
The agency sold 2,529 properties last year, down 15%, with the average price of a Foxtons sale dipping to £581,000, from £582,000 in 2017.
The grim outlook came as Nationwide, Britain’s biggest building society, said house prices dipped 0.1% in February from January to an average of £211,304, while the annual growth rate in prices edged up to 0.4% from 0.1%.
Robert Gardner, Nationwide’s chief economist, said: “After almost grinding to a complete halt in January, annual house price growth remained subdued in February. Measures of consumer confidence weakened around the turn of the year and surveyors reported a further fall in new buyer inquiries over the same period.”
Foxtons posted a pre-tax loss of £17.2m for 2018, compared with a profit of £6.5m the previous year. The loss reflected costs of £15.7m related to the closure of six branches and a writedown in its sales division.
Sales revenues fell by 15% to £36.2m in 2018, with the average revenue per transaction slipping to £14,300. Total revenues, which also include mortgage broking, fell 5% to £111.5m, with better lettings partially cushioning the blow from the slump in the London sales market. Lettings revenues rose 1% to £67m.
The annual loss and collapse in sales come after years of bumper profits and aggressive expansion following Foxtons’ 2013 stock market debut, marked by glossy new branch openings in areas where prices were rising fast that prompted protestors to paint “yuppies out!” on the agency’s windows.
Garry Watts, the chairman, said: “The London sales market is in a prolonged downturn and the current uncertainty surrounding Brexit is clearly impacting consumer confidence.”
This prompted Foxtons to shut branches in Beckenham, Enfield, Loughton, Ruislip, Park Lane and Barnes towards the end of last year but it said it has no plans for further closures. The agency, which was founded in Notting Hill in 1981, has 61 branches.
Tom Stevenson, the investment director at Fidelity Personal Investing’s share dealing service, said: “The estate agency business is all about volumes. Once you have covered your basic fixed costs, every extra sale is basically profit. This is great in a rising market with lots of transactions. In a falling market, when sellers are in short supply, it is a disaster.
“With Brexit uncertainty set to continue for even longer, the company has fallen back on bromides about how attractive the London property market is. Shareholders will ignore that and wait for people to start buying and selling again.”
The shares were down 0.5% at 60.5p on Thursday.