Savills shares slide as luxury home sales slump

By Myles Neligan

LONDON (Reuters) - Property services group Savills said on Tuesday sales of luxury homes in the previously booming London market fell 45 per cent in the first half of the year, and its shares fell sharply.

Savills, an estate agent for upmarket properties which also offers property consultancy, management and investment services, said the housing market slump made its full-year performance hard to predict, prompting analysts to cut their profit forecasts.

"Trading conditions for our transactional businesses in many of our markets makes predictions of full-year performance very difficult," the company said in a trading statement.

Savills shares were down 12.5 per cent at 188 pence by 9:45 a.m., making them the second-biggest faller in the FTSE 250 share index.

Savills Chief Executive Jeremy Helsby said the UK property market downturn, as mortgage lenders pushed up borrowing costs in the wake of the credit crunch, had accelerated since the spring.

"We all hoped this would be a short sharp downturn and we'd get back to normal in the second half. What we've seen, particularly on the residential side, is that life has got significantly worse over the last three months," he told Reuters in an interview.

Helsby said Savills was taking the biggest pain on the residential side of its business, which accounted for 20 per cent of profit last year. He added that the group was planning a "meaningful number" of redundancies in an effort to cut costs, but declined to provide more detail.

The company said prime country property was initially less affected than London but was now following suit. The very top end of the market, especially properties value at more than 5 million pounds, had so far proved relatively immune to the downturn, however.