Foxtons warns of tough start to 2023 as economic conditions tighten

Foxtons said it achieved double-digit revenue growth and better than expected profits for last year, but warned that the start of 2023 would be tougher as economic conditions toughen for many in the UK.

The estate agent said on Thursday that its lettings business had grown strongly in 2022, but admitted that sales would be “subdued” as higher interest rates and inflationary pressure weigh on demand.

“The economic outlook for the year ahead remains uncertain, but we have a growing portfolio of non-cyclical revenues” said chief executive Guy Gittins said.

Estate agents have warned that a challenging economic backdrop in the UK will continue to affect sales into 2023, as the market approaches the hottest time of year for house buying and selling. Savills recently cautioned that high interest rates and inflationary pressure would remain “in focus for some time.”

Foxtons said it expects to report an 11 per cent rise in revenue to around £140mn for 2022, ahead of market expectations. The group also said that its adjusted operating profit would beat analysts’ estimates.

The estate agent had raised its expectations in October for the full year as a squeeze in supply led to surging rents in London. The group, which has more than 26,000 tenancies in its portfolio, said its lettings and financial services business now generates around two-thirds of its overall revenue.

However, shares in Foxtons were down nearly 2 per cent in early trading.

Chris Millington, analyst at Numis Securities, said “it’s probably fair to say it’s going to be a very tough first half for them.”

“I have seen activity levels pick up a little at the start of this year relative to Q4, admittedly off a very low base, but the difficulty is knowing how that’s going to convert and how long it’s going to take to convert,” he added. “Everything takes a bit longer in times of uncertainty.”

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