The boss of London’s largest residential property agency Foxtons today said the sales market was seeing its busiest start to the year since before the pandemic, with buyers flooding to take advantage of lower mortgage rates.
CEO Guy Gittins said headline mortgage fixed deals falling below 4% “is certainly stimulating the market” in January after a “challenging” year when sales revenues fell 14%. It was overshadowed by the spike in interest rates that followed the mini-Budget in autumn 2022 and the inflation surge. In the year to date, buyer applications at Foxtons are up 30%, while new offers are 20% higher than in 2023.
Encouragingly the number of deal fall-throughs is down by 11%, pointing to a new confidence in the market and a determination to get transactions over the line. Gittins said: “This is different to what we have seen at the start of the year for many years. There is an urgency out there, most buyers know they have an opportunity to secure a good rate today and Halifax have seen three consecutive months of house price growth.”
Mortgage rates have fallen sharply as major lenders have competed for business after a dismal 2023 with waves of reductions in rates. This week has seen further cuts from the likes of Nationwide, Barclays and Virgin Money.
The Bank of England is expected to keep its official rate on hold at 5.25% next Thursday but the form of words used by its Monetary Policy Committee (MPC) and Governor Andrew Bailey will be pored over for any hints that a downward move will come soon. Markets are expecting the Bank’s first cut to come at the June meeting of the MPC.
Gittins was speaking as the agency — known for its trademark fleet of Minis — told investors in a trading update that revenues rose from £140 million to £147 million last year while operating profit ticked up from £13.9 million to £14 million.
The increase in turnover was driven by the lettings side of the business after a dramatic spike in rents in London over the two years since the end of the pandemic. Lettings revenues now make up 70% of the total, growing 16% last year to pass £100 million for the first time in Foxtons’ 43-year history.
Foxtons added 2,800 tenancies to its lettings portfolio last year following the acquisitions of rivals Atkinson McLeod and Ludlow Thompson. Gittins said the lettings markets was steadily stabilising as stock levels return to normal, allowing rents to level out, albeit at “historically elevated levels.”
He added: “We have delivered a year of market share growth and have ended the year with revenue and adjusted operating profit ahead of market expectations; our operational upgrades and investment in fee earners, training, data and brand, coupled with a return to driving innovation in the industry, are now consistently delivering material benefits to our competitiveness and market positioning, helping us to end 2023 as the UK’s fastest growing large lettings and sales agency brand
“Our strategy to prioritise non-cyclical and recurring revenues has driven revenue and profit growth, despite a weaker sales market, and in contrast to prior years.
“This, combined with the operational progress and significant market share gains made to date, gives me confidence that our strategy is working, and we enter 2024 focused on delivering our strategic priorities and medium-term profit ambitions.”
