Countrywide says prime London property prices falling, Q3 results in line
Helped by its best ever third quarter result, estate agents group Countrywide said it remained in line to hit full year targets despite cautioning that the rebalancing of price expectations in London might dampen short-term volume trends.
Countrywide
394.80p
16:35 05/03/21
After London-focused rival Foxtons warned on profits last week, broader-based Countrywide maintained its forecast for 2014 market volume growth of between 10% and 15%.
Group total income of £188.4m meant growth slowed, as largely expected, to 22% in the quarter from 29% in the first half, with group EBITDA of £40.2m as growth slowed to 38% from 70% in the prior six months.
EBITDA margin swelled 2.9 percentage points to 21.3%.
Notwithstanding the expected slowdown in sales volumes in London, the FTSE 250 group's London & Premier division recorded broadly flat quarterly revenues and earnings before interest, tax, depreciation and amortisation (EBITDA) year-on-year, helped by a strong lettings performance.
Year-on-year growth in market volumes was expected to slow in the third quarter, it pointed out, partly due to the government's Mortgage Market Review and tougher year-on-year comparatives.
Countrywide, which also operates the Bairstow Eves, Hamptons and Abbots estate agency chains, increased house exchanges in its estate agency segment by 11% to 18,008, down from 20% in the first half, while the London & Premier arm saw a 9% decline to 1,704.
Residential lettings properties under management maintained its strong growth with a 26% rise to 66,945.
The 18,713 mortgages arranged by the financial services arm was a 15% improvement. HSBC also chose Countrywide as its first partner after its recent decision to sell mortgages in the UK intermediary/broker channel for the first time.
Looking further forward, the company said there would be a "number of factors" that will make the market more volatile in 2015, including the General Election in May, the prospect of interest rate rises, the appetite of lenders to grow their mortgage volumes and the general economic backdrop.
"These factors, together with the recent slow down in market volumes, are likely to result in some volatility in the phasing of market growth during 2015."
Analysts at broker Westhouse Securities said the cautious statement "is possibly the most stark evidence that prices are falling in London", with new prime and cental proeprty stock priced at a lower level than would have been the case had the property come to market at the beginning of 2014.
"So far, the volume housebuilders have seen more robust conditions than agents - probably, in our view, because of Help to Buy. Next week there will be several trading statements and we will see if there is any change in stance. We, however, remain bearish on London-exposed housing stocks."