The UK’s biggest estate agent Countrywide issued a profit warning on Wednesday morning, another sign that Britain’s property market is finally slowing down.
Countrywide, which owns more than 50 High Street estate agents, says profits have fallen by 11% in the last nine months.
In a statement, it put the blame on a slowdown in transaction volumes, saying: “Despite generally encouraging economic conditions, the anticipated post-election recovery in residential transactions failed to materialise in any significant way.”
In other words, people have stopped buying and selling houses at the rate they were before May’s election.
Transactions across the whole of Countrywide’s portfolio, which includes the likes of Hamptons and Bairstow Eves, have fallen by 10% so far this year.
Countrywide is not the first estate agent to report a fall in the amount of property activity this year. In late October, Foxtons — the estate agent often associated with London’s increasing gentrification — said: “Transaction levels remain at historically low levels due to strong recent price growth and stamp duty changes.”
Furthermore, last week the Land Registry produced data showing that transactions at the top end of Britain’s property market have slowed, affected by last year’s stamp duty changes that meant people selling houses worth more than £1 million had to pay more tax.
Countrywide also pointed the finger at stamp duty, saying in Wednesday’s statement: “Changes in stamp duty have had no positive impact on transaction volumes but have constrained moves at the upper end of the market.”
The slowdown in sales seen by the likes of Countrywide and Foxtons could be a sign that the UK’s property market has finally hit a peak. Prices and activity have been booming over recent years, pushing the average price of a home in Britain up by £77,000 ($US118,600) over the last 5 years to £280,000 ($US431,300) according to the Office for National Statistics.
Deutsche Bank recently called the top of the UK’s property market. In a recent note that bank said property is “unlikely to enjoy the next thirty years as it did the last,” saying London, the frothiest market in the UK, is particularly due for a correction.
Countrywise shares are down more than 10% today after the downbeat update:
Other major estate agents are also diving amid fears the slowdown is industry wide. Shares in Foxtons fell by more than 7% this morning:
Shares in Savills, another major estate agent based in London, are also getting hit by the news:
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