July 29, 2016 / 6:16 AM / a year ago

Foxtons blames profit slump on Brexit, sees no property recovery in 2016

LONDON (Reuters) - London-focussed estate agent Foxtons (FOXT.L) blamed a 42 percent drop in first-half profit on Britain’s EU referendum, saying it led to a fall in transactions which is likely to last until the end of the year.

Foxtons, a symbol of London’s booming property market in recent years, also warned that it might slow the pace at which it opens more of its glass-fronted coffee shop-style outlets.

Property website Rightmove (RMV.L) said this week that uncertainty created by the Brexit vote had helped push down property transactions but saw its profits rise, helped partly by being spread across Britain, unlike Foxtons which operates almost entirely in the capital.

At Foxtons, pre-tax profit fell to 10.5 million pounds ($14 million) in the six months to the end of June and the firm, which warned last month that its earnings would be hit by the vote, said it did not expect sales to pick up in the months ahead.

“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,” CEO Nic Budden said.

Property prices began to fall towards the end of last year in some of central London’s most expensive areas but Foxtons, which floated at the height of London property growth in 2013, said sales were boosted in the first half ahead of a new property levy.

Many buyers brought forward property purchases ahead of an additional levy which was introduced on buy-to-let and second homes at the start of April.

But property was one of the first sectors to be hit by the referendum result with investors pulling cash from commercial funds, and several housebuilders and estate agents warning in recent days of a possible slowdown.

Reporting by Costas Pitas, editing by James Davey

Our Standards:The Thomson Reuters Trust Principles.
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