Britain’s second-biggest estate agent has warned annual profits will be well below expectations, blaming uncertainty in the property market caused by the vote to leave the EU.
In an unscheduled trading update, LSL Property Services, whose brands include Your Move and Marsh & Parsons, said business slowed in the run-up to the referendum on 23 June and had deteriorated since.
LSL said it had a strong first three months of the year as buyers snapped up properties before stamp duty increases in April. But business slowed in the second quarter as the referendum approached and potential buyers and sellers became wary.
The company said: “The EU referendum outcome has led to further consumer uncertainty and LSL’s post-referendum trading performance has reflected these market conditions. LSL now expects that full-year group operating profit will be significantly lower than previously anticipated.”
Analysts’ average forecast before the profit warning was for annual operating profit to increase to £46m, from £42.9m a year earlier. Jefferies, LSL’s house broker, cut its estimate to £35.5m.
The company’s shares plunged 21% in early trading and at 9.30am were down 7% to 230p – their lowest since November 2012. Rivals Countrywide were down 7% and Foxtons was off more than 4%.
LSL’s profit warning follows a similarly gloomy update from Foxtons soon after the referendum. The London-focused estate agent predicted concerns about Brexit would depress London property sales for the rest of this year.
The warnings underline the effect of the referendum on the UK property market. The Royal Institution of Chartered Surveyors has reported three straight months of falling buyer enquiries and predicts the number of homes changing hands will slump over the summer. Estate agents and surveyors are more pessimistic than at any time since the late 90s.
LSL bought the upmarket chain Marsh & Parsons, founded by the former Foxtons managing director Peter Rollings, in 2011 to expand in the central London market. In March, it described business in central London as challenging and said there had been no pickup after last year’s election.
Asking prices are falling sharply in London and some analysts have argued the vote for Brexit could be the catalyst to burst a bubble that has caused prices to double. Analysts at the French bank Société Générale said last week that prices could halve in London’s most expensive boroughs if senior City managers are forced to relocate outside the UK.
[Source:- The Guardian]
