London’s leading estate agency Foxtons Group has benefited from rising rental prices boosting lettings, but said house sales slumped by a quarter last year as mortgage costs climbed.
The business also revealed its yearly profit tumbled by a third, which it said was due to one-off costs including closing some of its branches.
Foxtons said 2023 was challenging for the housing market as a result of higher interest rates pushing up the cost of borrowing.
The number of house sales in London dropped by 22% last year, compared with 2022.
“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,” Foxtons said.
The value of house sales fell by 24% year-on-year.
However, the group said that mortgage deals on the market had begun to dip below 4% towards the end of the year, driving higher levels of demand among buyers who had been waiting for better conditions to buy.
Mortgage rates had shot up above 6% earlier in the year partly due to Liz Truss’s disastrous mini-budget in the autumn of 2022 – which sparked a period of volatility in the financial markets.
On the other hand, the lettings market boomed last year, it said.
High numbers of renters on the market and low levels of available homes helped push up rental prices, and led tenants to fix to longer contracts.
Lettings revenues, which represent the bulk of the group’s total sales, lifted by 16% compared with 2022.
It helped drive a 5% uplift in total revenues year-on-year for the group.
Rental prices started to cool toward the end of 2023, but remain elevated, Foxtons said.
Meanwhile, Foxtons revealed its pre-tax profit for the year fell by 34% to £7.9 million from £11.9 million the prior year.
It blamed the decline on one-off costs totalling £4.5 million, after agreeing to buy rival estate agency Ludlow Thompson and merge it into its own network.
It also said some of the cost related to closing three Foxtons branches as part of efforts to make savings.
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.”