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UK estate agent Winkworth has warned profits will fall short of forecasts as a slump in sales offsets a strong rental market, sending shares in the group down by 15 per cent.
The rapid rise in interest rates left sales down 20 per cent compared with the first half of last year, Winkworth said. As a result, profits for this year were expected to “fall below market expectations”.
The warning comes as mortgage rates continue to rise. The cost of two-year fixed mortgages this week surpassed the highs touched after the fallout of the ill-fated “mini” Budget last autumn.
Winkworth said that a large number of sales had been put on hold, despite the relatively small drop in house prices so far. Halifax reported last week that house prices in June fell 2.6 per cent from a year earlier.
The weakness in the sales market overshadowed a better performance from Winkworth’s lettings business, which benefited as rising mortgage costs forced more potential buyers to rent. Lettings revenue was 20 per cent higher in the first half of the year, the estate agent said.
“While the directors believe that confidence will return once buyers can access a broader choice of mortgage finance, the outlook for sales in the second half of the year remains uncertain,” the company said on Wednesday.
Shares in the London-listed company were down 30p at 115p in early trading.
