Shares in Countrywide Plc, (CWD) the UK's largest Estate Agency chain of companies, fell dramatically to an all-time low following the company's announced of a 59pc fall in their profits. Countrywide, which operates more than 55 High Street brands including names such as Bairstow Eves and John D Wood, said in a statement that there had been a 1pc increase in the number of homes sold last year compared to 2015, but in London there was a fall of 14pc.
The Company which is currently listed in the FTSE 250 blamed a variety of factors including the EU referendum, the impact of changes to stamp duty for landlords and high-end homes. According to Countrywide, 2016 had been an "unprecedented year," which had created a "volatile residential property market." It will be remembered that Countrywide had previously issued a profit warning in January, and had added that this volatility was likely to continue into 2017. In their opinion they saw the likelihood of fewer transactions and took the view house prices would be lower than 2016.
Another Estate Agent listed, Foxtons Group plc (FOXT) also reported a dramatic fall in their full year’s pretax profits – revealing they were more than halved! According to Foxtons harder times look set for the London property market in the year ahead. A new analysis of the housing sector confirmed increasing levels of financial distress among a number of UK estate agents. According to the professional services firm Begbies Traynor, nearly 1,000 estate agencies could be wiped out over the next three years.
What does this mean for both buyers and sellers in London? Well as we all know the property market rises and falls periodically only to rise once again, during which opportunities will be present for those who are smart enough to take advantage!
Perhaps one lesson to be drawn out of this is whether you are a buyer or sell it may be wiser to stick with the dependent Estate Agent who you can see daily operating in your High Street, rather than the obscure Plc?
DISCLAIMER: The news and research in the above article do not represent necessarily either the views nor should they be seen as a recommendation of Paul Simon Residential Sales.