Business

Foxtons estate agency profits tumble amid Brexit vote

Picture of a Foxtons's sign Image copyright Getty Images

High-profile London estate agency Foxtons has announced a 42% fall in profits, blaming uncertainty around the EU referendum for the fall.

It made a pre-tax profit of £10.5m in the first half of the year compared with £18.1m during the same period a year earlier.

There had been a "sharp contraction" in the London property market in the second quarter of the year, it said.

Foxton's share price fell by 8% in early trading on Friday.

Since the result of the Brexit vote was announced, it has fallen by about 30%.

'Prolonged uncertainty'

London property prices have risen sharply in recent years owing, in part, to its attraction to overseas investors. However, prices had slowed this year, partly owing to a new stamp duty surcharge facing overseas investors.

The result of the referendum, in which the UK voted to leave the EU, would affect the market in the capital, according to Foxton's chief executive Nic Budden.

"The result of the referendum to leave Europe is likely to lead to a prolonged period of further uncertainty and we do not expect London residential property sales markets to show signs of recovery before the end of the year," he said.

The slower market conditions meant the company would review the pace of new branches being opened in London.

At present it has 63 branches but has an ambition to open 100 across Greater London.

A month ago, shortly after the referendum result, Foxtons signalled that its profits would be hit in the first half of the year.

Market split

Analysts have predicted that the UK vote to leave the EU will have an impact on the London property market. Other areas may be less affected.

Earlier in the week, the UK's biggest property portal Rightmove announced that its profits were on track, and in an upbeat commentary said that "worries of a slowing UK housing market and potential closure of estate agents are overdone".

Housebuilder Taylor Wimpey said it had not been affected by the Brexit vote, declaring that "current trading remains in line with normal seasonal patterns".

On Thursday, the UK's biggest building society, the Nationwide, said that the Brexit effect on the property market and house prices could take months to become clear.

Figures from the Bank of England released on Friday showed that mortgage approvals for house purchases in June totalled 64,766, compared with an average of 69,998 over the previous six months.

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