The Brexit Jobs Barometer

To gauge the pain, look at the London real-estate agent

Foxtons, the hard-charging firm of London estate agents, is going to be a key indicator of how safe your job in the city's financial services industry will be after Brexit.

The company, which focuses on the U.K. capital, warned on Monday full-year earnings will fall "significantly" because of slowing sales and uncertainty.

London Falling

A profit warning sent Foxtons' shares tumbling to the lowest level since its IPO. Bearish for banking jobs?

Source: Bloomberg

Ever the bullish estate agent, it added it remained confident "of the attractiveness of London property sales markets." Investors didn't buy that argument: the stock fell as much as 26 percent to its lowest since the company went public in September 2013.

Britain's vote to leave the European Union is a clear threat to London's booming property market in that it raises a question mark over tens of thousands financial services jobs. These people are key clients for an upmarket agency like Foxtons.

Almost all Foxtons' branches are in the London area. The average price for homes it helped sell last year was 550,000 pounds ($727,000) -- well in the price range for those in the financial services industry.

Boom Town

London house prices have known only one direction lately. Could Brexit change that?

Source: U.K. Office for National Statistics

It's not as though Foxtons didn't warn investors. In March, the company said "any reduction in London's standing as a major financial city" caused by a vote to leave could affect the property market.

Quantifying the precise impact on London's property market remains difficult -- it will take months for Britain to settle its future relationship with the EU and therefore which banking functions like foreign exchange trading may have to relocate to Frankfurt, Dublin or Paris. A recession seems likely but its magnitude isn't clear.

But that's exactly the problem: uncertainty is a killer for property transactions.  

If you're worried about your job now isn't an ideal moment to take out an enormous mortgage to buy a poky studio in a crime-ridden area otherwise known as cozy fixer-upper in a vibrant district (take your pick). And you only need one person with cold feet to abandon a purchase to disrupt an entire chain of buyers.

Property Hedge

Foxtons' lettings business is supposed to provide protection against more cyclical sales

Source: Foxtons annual report

Foxtons has sought to hedge itself by building a lettings business, which now accounts for almost half of revenue.  That works fine if people stay in London and simply decide to rent rather than buy -- but if your job is moved to Frankfurt, you won't require a rental property either.

Now, to be sure, predictions of the imminent demise of London's property market have proved consistently false in recent years. There are still grounds to think this time will be no different and Monday's sell-off may be overdone: a growing population, shortage of housing stock, taxpayer aid for first-time buyers and rock-bottom mortgage rates should all serve to support prices. The pound's fall may encourage opportunistic interest from wealthy overseas buyers.  

All the same, if London's financial services industry takes a big hit from Brexit it could finally take some of the air out of the capital's property bubble. Foxtons' stock price may be a good place to look if you want an indicator of how much of the financial services industry will still be there after Brexit.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Chris Bryant in Frankfurt at

    To contact the editor responsible for this story:
    Edward Evans at

    Before it's here, it's on the Bloomberg Terminal.