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Foxtons struck an upbeat tone on home sales on Thursday due to easing mortgage rates, as strong lettings pushed the estate agent’s earnings above expectations last year.
The London-based group said it had entered the year with an “under-offer pipeline significantly ahead of the prior year”, as mortgage lenders cut borrowing costs back to levels not seen since 2022.
“Buyer demand has grown as mortgage rates have begun to normalise,” the company said in a trading update. “Any sustained reduction in interest rates is expected to spur significant further growth in buyer demand.”
The agent benefited from fierce competition for a reduced supply of rental homes in London last year as high borrowing costs pushed some landlords out of the market and drove up rents.
Foxtons is expecting annual revenues of about £147mn, up 5 per cent year on year, and adjusted profit of about £14mn, broadly flat compared with the previous year, both beating consensus forecasts. It will publish audited full-year results in March.
Revenue from lettings grew by 16 per cent year on year, passing £100mn for the first time and offsetting expected falls in sales.
Foxtons has sought to increase its activity in the rental market, which has held up better than property sales amid a deteriorating economic climate. Lettings accounted for about 70 per cent of total sales in 2023.
Foxtons said lettings would remain “resilient” this year, adding it expected rents to stabilise but remain at “historically elevated levels”.
The agent is expecting a boost from home sales, too, driven in part by market share gains last year.
Analysts at Peel Hunt said Foxtons’ sales pipeline was “well ahead of last year’s subdued level” and “hard fought” market share gains from 2023 should “leave the group in a better place this year”.
