Profits have fallen at LSL Property Services amid a challenging housing market which the firm says is likely to continue through this year.
The Newcastle-based group which includes estate agency brands Your Move and Reeds Rains reported a slump in underlying operating profit from £49.3m to £36.9m as the firm blamed a smaller house buying market and the fallout from last September's mini-Budget. In full year results for 2022 the publicly listed firm said it had made a group loss of £56.7m compared with a £72.6m profit in 2021, having reduced the carrying value of goodwill by £87.2m to reflect tougher trading conditions.
Despite the downbeat numbers, LSL said it expected to remain resilient in a difficult but steadily improving market through the second half of this year. It also pointed to progress in streamlining its operations to focus on business-to-business services through the sale of its consumer facing financial services business to the joint venture it shares with Pollen Street Capital and the £29m disposal of Marsh & Parsons.
LSL told investors that its surveying and valuation business had traded strongly through to Q3 2022, until the Liz Truss Government's mini-Budget derailed momentum and caused what it called a "market-wide hiatus of mortgage activity". The firm estimates the event cost it at least £5m in underlying operating profit.
David Stewart, group chief executive officer, said: "We have made significant progress in re-shaping the group in line with our strategy and each of our core businesses are performing well. After a strong start to 2022 which saw us build substantial pipelines in estate agency and financial services, market conditions deteriorated as a result of political instability and sharply rising interest rates and although we expect to see a steady improvement in activity over the course of the year, it is clear that conditions will remain challenging throughout 2023.
"However, LSL remains well-positioned for future growth. Independent mortgage brokers typically perform well in challenging markets, being agile and close to their client's needs, and this will help ensure our financial services network businesses will remain resilient. In addition, although some areas of the valuation market remain depressed following the market uncertainty which followed the 2022 mini-budget, our surveying and valuation business remains very well-placed for medium-term growth, helped by recent contract wins and good progress made in developing new income streams."
READ NEXT:
Royal Quays Outlet shopping centre up for sale after receivers appointed
Newcastle's hedgehog lab acquires York's Netsells following £6.3m investment
Northumberland family firm Cussins to build on success after £14m funding deal
- Cameron Hall Developments and Jomast Developments join forces for major Wynyard project
- Read more North East business news here
