London’s property market has slowed dramatically as buyers go on strike amid fevered speculation about the contents of the “delayed” Budget, estate agency Foxtons warned today.
In a trading update its chief executive Guy Gittins said:"Macroeconomic uncertainty and speculation surrounding the delayed Autumn Budget has resulted in a subdued sales market as some buyers adopt a 'wait and see' attitude to purchases.”
As a result Foxtons today downgraded expectations for profits for the full year sending the shares tumbling more than 8%, or 4.75p, to an 18 month low of 51.65p in early trading.
London biggest estate agency chain said that revenues from home sales fell 7% in the third quarter of the year from £13.5 million to £12.5 million. The followed a strong increase earlier in the year as buyers pushed through deals ahead of the April increases in stamp duty.
Foxtons said the slump was due deals being bought forward to the first quarter as well as “limited interest rate reductions, and uncertainty around the delayed Autumn Budget.”
The warning follows months of headlines about a possible shake up of property taxes in the Budget that could impact the London market hardest.
Ideas the Treasury is said to be exploring include a new tax on the sales of homes priced at more than £500,000 - roughly the average price of a home in the capital - and the removal of the capital gains exemption on primary residences valued above £1.5 million.
The introduction of a new council tax band for higher-value properties in England could also be considered.
Foxtons said sales in London are “likely to remain subdued for the rest of the year, in particular in the run up to the delayed Autumn Budget which is creating additional market uncertainty and making it more challenging than usual to accurately predict Q4 sales revenue. As a consequence, there is a risk that Q4 Sales revenue falls below management's expectations.”
As a result operating profits for the full year are “expected to be in the range of £21.5 million to £23.2 million” below previous City expectations of £23.7 million profit. Last year the company made operating profits of £21.6 million.
Gittins added: “There remains significant pent-up demand in the London volume market and we believe market conditions will improve once there is better clarity following the Budget, providing a more positive backdrop as we execute against our growth strategy.”
A strong lettings market meant that overall revenues for the third quarter were up 3% to £49 million and year-to-date revenue was up 7% to £135.1 million.
