Upmarket estate agent M Winkworth (LON:WINK) has warned profits will be below expectations this year after the anticipated post-election housing sales surge failed to materialise.
The election, which was “unexpectedly clear-cut”, has failed to buoy housing demand, particularly in the company's core London market, where sales remain particularly slow, Winkworth said.
While the election affected the market in the short term, “a large part of the slowdown can be attributed to the stamp duty changes introduced in the latter part of 2014,” Winkworth added.
The higher stamp duty has led to a significant rise in tax on properties worth more than £900,000, with the company noting the higher end of the market has been slower than the lower end.
Looking ahead, the company sees much of the same in 2016, with stamp duty “undermining demand for more expensive properties.”
However, low mortgage rates and wage inflation have boosted the lower end of the market, and Winkworth also expect this trend to continue.
Despite the profit miss, this year will still be the second best ever in the firm’s history, despite transactions being 26% off their peak, partly due to an uptick in the rental market.
“The private rental sector now represents 30% of the London property market and we expect rentals to continue to grow in importance, with a shortage of supply underpinning prices,” the firm said.
Winkworth added that, as it has no debt, it will continue with its progressive dividend policy.
Shares were almost 6.5% lower to 152p today.