Fewer sales, and lettings just about holding up. That’s the picture emerging from the latest data from London’s most ubiquitous real estate agent.
Foxtons posted a 34 percent drop in income from selling homes in the third quarter compared with the year-earlier period. That was cushioned slightly by a marginal increase in revenue from lettings.
The fall in sales is expected. A 3-percentage-point increase in sales tax on additional homes kicked in this April. That was followed by the referendum to leave the EU in June. Both helped to take the shine off London's booming property market. Land Registry data show transactions in the capital are down 78 percent in the five months from April compared with the year-earlier period. That's a problem for estate agents who only take a fee on completed sales.
The rentals business is becoming increasingly important for estate agents as more people are priced out of buying their own homes. Rival agent Countrywide estimates that next year more homes could be let than sold for the first time since the 1930s.
For Foxtons, the question will be whether it can grow the rental business fast enough to replace shrinking revenue from sales. It's already trying to woo new landlords in areas like Peckham (yes, you read that right) by offering them the first 12 months commission free. But interest from new tenants was lower.
If Brexit further saps London's attractiveness as a place to live, it will get harder for even the pushiest of estate agents to find people interested in that des-res -- whether to buy or to let.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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