Foxtons PLC (LON:FOXT), the London-focused estate agent has said its core earnings almost halved last year and sales could continue to fall this year after a slump in demand due to the impact of the Brexit vote and the hike in Stamp Duty for buy-to-let purchasers.
The high-profile London firm - known for its chain of coffee shop-style outlets and fleet of Minis – said its underlying earnings (EBITDA) fell by 46% to £25mln 2016, lower than the £28mln market consensus forecast.
Foxtons, once a symbol of London's surging property market, floated in 2013 ahead of the peak of the UK housing boom, and has since failed more than once to meet market expectations.
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Nic Budden, Foxtons’ chief executive, said: "(There was a) significant fall in sales volumes immediately following the first quarter of 2016.”
He added: “Should current levels of sales activity continue in the short term, it is likely that 2017 volumes will be below those in 2016," he said.
In reaction, Foxton's shares slumped 9% lower in early trading, dropping 9.25p to 89.75. Fellow mid cap estate agents Countrywide (LON:CWD) also suffered in sympathy, shedding over 6%, or 11.25p at 168.75p.
But analysts at Numis Securities remained bullish on Foxton's, despite cutting their 2017 estimates back to being flat year-on-year, upgrading their rating for the stock to 'buy' from 'add' with an unchanged target price of 123p.
In a note to clients, the analysts said: "Whilst the PE rating on Foxtons is high, this reflects very depressed levels of market activity and we would note it remains in a net cash position and will benefit significantly when activity levels improve."
Britain's third-largest housebuilder Taylor Wimpey also said today that lower selling prices in central London in December had affected its year-end order book performance.
Central London property prices have fallen sharply in recent months, according to a series of surveys, after a tax hike introduced in April hit demand for top-end homes, compounded by the uncertainty for particularly foreign investors of the Brexit vote.
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