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| Foxtons and Travis Perkins shares fall amid housing market fears | Foxtons and Travis Perkins shares fall amid housing market fears |
| (35 minutes later) | |
| Shares in Foxtons and Travis Perkins have been hit after the companies raised fears over the strength of the housing market. | Shares in Foxtons and Travis Perkins have been hit after the companies raised fears over the strength of the housing market. |
| Foxtons, the south-east-focused estate agent, warned that the market was taking time to recover, especially in central London, where property transaction levels remain at historically low levels owing to strong recent price growth and stamp-duty changes. | |
| Nick Budden, the chief executive, said: “We expect any recovery of the property sales market to be slow due to low current levels of stock.” | Nick Budden, the chief executive, said: “We expect any recovery of the property sales market to be slow due to low current levels of stock.” |
| Although he said Foxtons remained broadly on track to meet full-year expectations, the shares still closed down more than 8%, at 203p. | |
| Changes to stamp duty, introduced by the chancellor, George Osborne, mean that although the majority of homebuyers will pay less in stamp duty, buyers of homes costing more than £937,500 now pay more, hitting the prime London market. | Changes to stamp duty, introduced by the chancellor, George Osborne, mean that although the majority of homebuyers will pay less in stamp duty, buyers of homes costing more than £937,500 now pay more, hitting the prime London market. |
| But Foxtons added that sales commissions were up 12.8% to £18.5m, reflecting gains in market share and new branch openings. The chain said in the year to date it opened seven branches, focusing on high-growth areas in outer London. | But Foxtons added that sales commissions were up 12.8% to £18.5m, reflecting gains in market share and new branch openings. The chain said in the year to date it opened seven branches, focusing on high-growth areas in outer London. |
| It said it remained on track to open between five and 10 branches each year, and had a pipeline of new sites secured for the next 18 months. Budden said: “We are in a strong position to capitalise on market growth currently being seen in outer London areas through the organic expansion of our branch network.” | It said it remained on track to open between five and 10 branches each year, and had a pipeline of new sites secured for the next 18 months. Budden said: “We are in a strong position to capitalise on market growth currently being seen in outer London areas through the organic expansion of our branch network.” |
| Travis Perkins, the FTSE 100 building supplies firm that owns the Wickes DIY chain, closed down 6% at £18.45 after it warned that underlying earnings growth for the year would come in at the lower end of expectations. | |
| The chief executive, John Carter, said: “While we planned for a modest reduction in renovate modernise and improvement markets through the summer, given the slowdown in secondary housing transactions towards the end of 2014 and early part of 2015, we saw weaker market demand than anticipated.” | The chief executive, John Carter, said: “While we planned for a modest reduction in renovate modernise and improvement markets through the summer, given the slowdown in secondary housing transactions towards the end of 2014 and early part of 2015, we saw weaker market demand than anticipated.” |
| Related: Is Foxtons the estate agent London deserves? | Andy Beckett | Related: Is Foxtons the estate agent London deserves? | Andy Beckett |
| A profits warning from the insulation specialist, SIG, added to the uncertainty over the outlook for the housing market. The company said problems in the UK and France meant profits would be between £85m and £90m rather than the £100m analysts had expected. | A profits warning from the insulation specialist, SIG, added to the uncertainty over the outlook for the housing market. The company said problems in the UK and France meant profits would be between £85m and £90m rather than the £100m analysts had expected. |
| It said market conditions were deteriorating in the second half, particularly in France. SIG has also been affected by a lower than anticipated level of demand in the UK renovations market. The company’s share price ended the day at 141.5p, down more than 20%. | |
| House prices have been rising at about 5% in the UK, with some areas recording increases of twice that. However, Thursday’s warnings added to fears that the rate of increase was unsustainable. | House prices have been rising at about 5% in the UK, with some areas recording increases of twice that. However, Thursday’s warnings added to fears that the rate of increase was unsustainable. |
| Last week, the independent research firm Capital Economics warned: “Most of the evidence suggests that prices have become worryingly dependent on record low levels of interest rates. So a period in which prices grow in line with, or preferably by less than, incomes now looks overdue. We expect house prices to rise by 5% this year, but by just 2% in both 2016 and 2017.” | Last week, the independent research firm Capital Economics warned: “Most of the evidence suggests that prices have become worryingly dependent on record low levels of interest rates. So a period in which prices grow in line with, or preferably by less than, incomes now looks overdue. We expect house prices to rise by 5% this year, but by just 2% in both 2016 and 2017.” |