Leading London estate agent Foxtons today warned that the impact of the Brexit referendum vote will leave its profits “significantly lower” this year.
The chain, which has 62 branches in London and Surrey, said Thursday’s decision to leave the European Union will prolong the uncertainty hanging over the London market, leading to fewer deals,
Chief executive Nic Budden said: “Whilst we had a strong start to the year, we said in our first quarter update that we expected the first half to be challenging ahead of the EU referendum.
“Since then recent sales volumes have been slow as uncertainty and higher stamp duty has led many buyers and sellers to sit on their hands. The result of the referendum has increased uncertainty and is likely to mean that these trends continue for at least the remainder of the year.”
The profit warning came as one London agent described the Brexit vote as “an absolute disaster” for the top end of the market while other said prices would be supported by the fall in sterling, which is attracting more foreign investors
Guy Watson, managing director of Champions in Knightsbridge, which sells luxury homes with values up to £7 million, said: “We saw two £1 million flat sales fall through immediately after the vote results came in on Friday.”
Charles Champion, director of the firm, said that buyers of the luxury flats in Hammersmith had pulled out because of concerns over Brexit.
He said: “There will be an inevitable knee-jerk reaction and lots of other estate agents in prime central London will be worried about how they can keep their sales up.
“George Osborne has already done the dirty work and caused a lot of damage by hiking up stamp duty. It nearly killed the market.
“A lot of investors from Hong Kong and Malaysia just want out, so much that they will accept around 15 per cent less what they paid for it two years ago.
“But people will still come here from the Middle East, they love it here, English is spoken and London’s shopping is a massive pull.”
Developer Oaymayne said “a few” purchasers of apartments at its Two Fifty One Southwark Bridge Road development near Elephant & Castle had decided to exercise “Brexit clauses” in their contracts
Managing director David Humbles said: “The Brexit Guarantee pledge which was offered at the launch of Two Fifty One Southwark Bridge Road is being upheld and we can confirm that a few purchasers have decided not proceed given the uncertainty of the market. However, the majority are continuing with their purchase and the marketing strategy to offer the pledge at the launch was a worthwhile exercise.”
But most experts said they expected prices in the mainstream London property market to hold up as low mortgage rates and the housing shortage continue to bolster demand.
Ray Boulger, senior technical director at mortgage brokers John Charcol, said he expected rates on fixed deals to fall slightly in the aftermath of the referendum.
Matthew Harrop of John D Wood estate agents in Kensington said the drop in the pound could lead to an increase in foreign investors.
He said: “I believe a drop in sterling will attract foreign investors and give them a chance to buy London property at a discount, further with interest rates more likely to fall in the short term than rise it makes forecasts of falling house prices look unlikely.”