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Foxtons warns London property downturn to last all year

Foxtons scrapped a special dividend warning that Brexit had caused a “prolonged period of further uncertainty”.
London city skyline
Brexit uncertainty had hit London property sales hard.

Foxtons Group PLC (LON:FOXT) warned that the downturn in London’s housing market could last for at least the rest of 2016.

Brexit uncertainty had hit London property sales hard, sloughing 42% off the estate agent’s half-yearly profits.

Pre-tax profit fell to £10.5mln in the first six months, from £18.1mln the previous year. Property sales volumes were down just over 10%, pushing  revenues 7% lower to £31.3mln.

Lettings revenues fell almost 3% to £32.6m in the lead up to the referendum.

Foxtons scrapped a special dividend warning that Brexit had caused a “prolonged period of further uncertainty”.

“We are anticipating relatively weak market volumes through to the end of this year. We’ll probably take our foot off the pedal a little bit next year, naturally taking a more cautious approach to the business while the market settles down,” said chief executive Nic Budden.

He told investors that the group would be scaling back branch openings next year.

Since it first went public in 2013, it has opened at least 5 branches every year.

However Budden said the group remained committed to its target of 100 branches across greater London.

Foxtons issued a profit warning the Monday immediately after the referendum, which sent shares down more than 25%.

Analyst at Hargreaves Lansdown remained cautious, but said all was not doom and gloom for the London property market.

“Monetary policy remains accommodative, with low mortgage rates, Help to Buy and a chronic housing shortage all helping to underpin property prices. Over the last ten years, the population of London has increased by 1.2 million people, but only 200,000 new homes have been built in that time,” said senior analyst Laith Khalaf.

But he warned: “If the Brexit negotiations don’t go well, the London property market is probably first in the firing line because financial jobs could move out of the city. However, at this early stage it’s far too early to judge the likelihood of this happening.”

Shares were down 11% to 14.25p.

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