M Winkworth Plc (AIM:WINK) shares plunged in early trade after it warned that pre-tax profits will be below last year and cut its dividend to 2.9p per share from 5.4p paid a year ago.
The estate agent said the house sales market "proved to be more challenging" in the past quarter as interest rates rose higher and mortgage approvals slid lower, but lettings demand has been "strong".
Gross network income is expected to fall around 6% for the first half of the year, on sales revenue down roughly 20% year on year and lettings revenue up roughly 11%.
Pre-tax profits in the first half are expected to be below last year's level and for the full year are seen as likely to be below market expectations.
"Property prices have held up reasonably well but transactions have slowed, leading to a high number of agreed sales being delayed to the second half of the year," the AIM-listed company said, adding that the outlook for sales in the second half of the year remains uncertain.
The balance sheet remains debt free, with cash in line with the £4.1mln reported a year ago.
Shares plunged to 110p in early trade from the 145p close yesterday, but by mid-morning were back up to 145p.