Foxtons warns of hit from lending clampdown and rate rises
The spectre of higher interest rates and a clampdown on irresponsible mortgage lending is set to hit second-half trading at Foxtons, the estate agent group warned on Wednesday.
Foxtons said measures by regulators and the Bank of England to rein in the rampant housing market were already hitting short-term demand, meaning rapid first-half sales would give way to slower activity in the second six months of the year.
The group, which floated on the stock market last September, said expectations of higher interest rates were also taking their toll on buyers.
Chief executive Nic Budden said: "Consistent with others in the sector, we expect this to lead to lower rates of market growth in both property sales transactions and prices during the second half."
Foxtons said higher first-half sales and mortgage volumes and efficiency savings had helped it to increase revenue and profit significantly in the six months to June 30.
The group said the performance would enable it to pay an interim dividend and a special interim dividend of 1.77p and 2.77p respectively, equal to a total payment of £12.8m.
Group revenue rose 16.2% to £72.8m, driven by strong sales and mortgage broking growth, while adjusted pre-tax earnings before interest, depreciation and amortisation lifted 28.7% to £24.9m.
The group opened five branches in the period and said it was on track to open two more branches this year. It has secured enough sites to maintain its expansion programme into 2015.
"We have a clear strategy focussed on the organic expansion of our branch network, increasing our market share and improving profitability," it said.
Shares fell 17.1p or 5.85 to 277.2p at 09:43 in London.
PW