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Countrywide downgraded by City investment consultancy

Jefferies, a major City adviser, is downgrading its 2016 estimate for Countrywide’s performance over the rest of this year.

In a statement this morning it said that as a result of weak transactions, Brexit uncertainty, stamp duty dampening the high end of the market and Countrywide’s decision to scale back its expansion plans, it was downgrading Countrywide’s status from ‘Buy’ to ‘Hold’.

Jefferies said this morning: “The UK housing market and political landscape have changed significantly since the [Countrywide] 'Building Our Future Strategy' was launched one year ago. In our view, it is no longer the right time for mergers and acquisitions. We have therefore scaled back our assumptions on M&A activity, which was a significant part of the expansion strategy. We have also reduced margins to reflect the fact that when housing transactions slow, operational gearing turns from friend to foe.”


Last week we reported that Countrywide's share price was hovering around 200.

In another announcement this morning, Jefferies also downgraded its advice for LSL Property Services from ‘Buy’ to ‘Hold’.

The consultancy stated that “market headwinds” are building for 2017 and warns that housing transactions will fall by five per cent in the UK outside of London and by 10 per cent within London.

”We suspect that the existing homes market in the UK will remain subdued until the uncertainties around Brexit abate” the Jefferies note to investors states.

Jefferies cites as evidence last week’s Land Registry data showing transactions in England were down 32 per cent year on year and down 54 per cent in inner London.

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    "Jefferies cites as evidence last week’s Land Registry data showing transactions in England were down 32 per cent year on year and down 54 per cent in inner London."

    Bad news for Countrywide but worse news for those agents/ investors who have bought into a fixed fee business model that relies on ever increasing volumes to make a profit. A 30% drop in transactions is going to require a massive budget spend to make up the difference in market share just to stand still = business model - blown

  • Trevor Mealham

    Bad news for all 'average' lone/sole agency models Chris.

    Models now need something to increase take on's and sales over their competitors, OR a angle to up lever fees from each take on.

    And how will the traditional annual portal fee hikes be taken.

    The budget fixed fee models £499-799 may have to drop lower whilst increasing marketing spend. But will their VC backers want to keep pouring funds in. we'll likely see the first big budget fall in the coming 6-12 months.

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    Having detailed knowledge of what is going on inside leads me to believe that this consultancy is being very, very kind. Once the Q3 numbers appear, sell will be the order of the day I expect. Low morale, lack of direction and leadership of predicated on a breathtaking lack of understanding of the industry is creating a situation the will be difficult to arrest. Not even a big improvement in market conditions (which isn't coming anytime soon) will change the fortunes of what was a company made up of some excellent brands.

  • Jon  Tarrey

    Any good news for CW? It's hard to remember the last time we heard anything upbeat about the company. They're slowly turning into Foxtons - one PR disaster after another, bad results after bad results, etc. They even seem to be taking on Foxtons mantle of being the estate agents that everyone loves to hate.


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