The London real estate market is beginning to show signs of cooling off.
Foxtons Group PLC, one of the city’s biggest real estate brokers, reported weak third-quarter financial results and warned that earnings for the year would fall short of investors’ expectations, the Wall Street Journal reported.
The firm blamed the drop on “a sharp and recent slowing of volumes in London property sales markets following an exceptionally strong nine-month period” in a statement.
The stock fell 19.6%, its largest one-day drop since the company went public last year, to close at 165 pence, 59% below its peak of 402 pence reached in February this year.
Recent national statistics show London house prices were up nearly 20% in July from a year earlier. But over the summer, evidence mounted that a tipping point had been reached. In September, real estate agents warned that constrained lending, looming increases in interest rates and political uncertainty were making buyers more cautious.
So far, market prices in high-end neighborhoods have been hit the hardest. Last week, data from buying agency Huntly Hooper showed average sale prices for central London homes costing at least £10 million ($16.1 million) fell 7.4% on the year.
Foxtons said it expects the market “to continue to be constrained for some time due to political and economic uncertainty within the U.K. and Europe, tighter mortgage lending markets and mismatches between the price expectations of buyers and sellers.” [WSJ] —TRD