House sales slow to 2008 financial crisis levels, says estate agent Foxtons

05 March 2024 , 12:49

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Despite benefiting from rising rental prices, the company said house sales fell by a quarter last year as mortgage costs increased (Image: PA Archive/PA Images)

House sales have slowed down to levels seen during the 2008 financial crisis and the pandemic, says the estate agent Foxtons.

Despite benefiting from rising rental prices, the company said house sales fell by a quarter last year as mortgage costs increased. The firm also disclosed that its annual profit dropped by a third due to one-off costs, including the closure of some branches.

House sales in London decreased by 22% last year compared to 2022. Foxtons said; "In fact, transaction volumes were at some of the lowest levels since 2008 and 2020, years impacted by the global financial crisis and the Covid-19 market shutdown respectively.'

The value of house sales declined by 24% year-on-year. However, the group noted that mortgage deals had started to fall below 4% towards the end of the year, sparking increased demand among buyers who had been waiting for better conditions to purchase.

Mortgage rates had soared above 6% earlier in the year, partly due to Liz Truss's mini-budget in the autumn of 2022 which triggered a period of instability in the financial markets. On a positive note, the lettings market flourished last year, according to Foxtons.

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A high number of renters and a low supply of available homes led to an increase in rental prices and encouraged tenants to commit to longer contracts. Lettings revenues, which makeup most of the group's total sales, rose by 16% compared to 2022. This helped boost the group's total revenues by 5% year-on-year.

Foxtons said that rental prices began to drop towards the end of 2023, but they are still high. However, Foxtons reported a 34% drop in pre-tax profit for the year, falling to £7.9 million from £11.9 million the previous year.

The company blamed this decrease on one-off costs totalling £4.5 million, after it agreed to purchase rival estate agency Ludlow Thompson and merge it into its own network. It also said some of the cost was due to closing three Foxtons branches as part of efforts to save money.

The group also told shareholders it had invested in staff, training, technology and improving its processes during the year, resulting in the business being "fundamentally transformed". Chief executive Guy Gittins said: "We have achieved a lot in a short space of time by making improvements across the business and Foxtons is now in much better shape than the company I inherited 18 months ago."

Lawrence Matheson