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TODAY'S OTHER NEWS

Foxtons share price hits new low - other traditional agents suffer too

Foxtons share price hit a new low yesterday, dropping to only 46p early in the afternoon: it eventually closed narrowly up at 47p.

The agency’s share price has suffered long-term collapse, reflecting the growing challenges of the London housing market - and in particular the prime London market.

Figures released by the government yesterday suggested that sales volumes were down around 30 per cent across London year-on-year. 

The stock market also suggests there has been concern over recent personnel announcements at Foxtons.

The former chief executive of Foxtons, Michael Brown, last month announced that he was quitting as a director of the firm. He succeeded founder Jon Hunt as head of Foxtons some 11 years ago when the company was sold to private equity firm BC Partners for £360m shortly before the global banking crisis occurred.

The Foxtons share price was also troubled by the company being named at the start of this month by insolvency firm Moore Stephens as evidence that the UK estate agency industry is in fragile condition. 

This is all a far cry from Foxtons’ first day on the London Stock Exchange back in September 2013 when its shares soared to almost 300p, and from its bull run six months later when it peaked at 386p in March 2014.

Yesterday saw small price drops for other traditional agencies - Countrywide, LSL Property Services, Hunters, Winkworth and The Property Franchise Group.

The stock market woe for traditional Agents came after gloomy Land Registry data showing transactions completing in March across the UK fell 20.3 per cent compared to a year earlier, at just 73,977.

Foxtons makes it next report to shareholders on July 30; its most recent trading update, in May, was gloomy in the extreme when reviewing the first quarter of 2018.

Its sales revenue for the opening of 2018 was well down at £8.2m, compared with £11.1m for the same period of 2017. Lettings revenues were at £14.3m (2017: £15.5m), and Alexander Hall mortgage revenue £2.0m (2017: £2.1m). 

Selected quotes from that trading update include: “Conditions in the London property market remain very challenging with sales volumes lower than prior year. …Foxtons entered 2018 with a lower sales pipeline compared to the same point last year and this resulted in lower levels of activity in the quarter…Performance in lettings was impacted by a slow start to January and the timing of Easter, which had a negative effect on revenue.”

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    What the market is telling us is that Foxtons no longer has a business model. A decade ago someone selling a posh flat in Fulham had to accept £30k in fees to have a chinless 22 year old paste a few pictures on RIghtmove because there was no viable alternative. Now that online agents have come of age these egrecious fees are being competed away. The two other killers are the restriction on rental fees (which has really killed Foxtons) and the long-overdue revaluation of business rates. Suddenly all those mega expensive high street locations they have are properly taxed, and now they find that actually they don't make sense. I think Foxtons will go the way of some of the restaurant chains which failed to move with the times. 47p a share? Not cheap in my view.

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    Lets keep it in perspective regarding traditional versus online only estate agents.........Purplebricks share price has also collapsed by 34.43% over the last 12 mths !

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