Savills, once a safe bet for year-on-year growth, has seen its underlying UK residential profits plunge 44 per cent with economic and political uncertainty caused by Brexit taking the blame.
In its half-year report to shareholders and the City it says the housing market remains challenging “with trading volumes at the lowest level since the global financial crisis.”
Values in prime central London are down some 13 per cent, the agency says, and its all-UK residential revenue has fallen 1.5 per cent to £57.3m.
In the second hand agency business, revenues grew by one per cent “achieved through a combination of strong performance in our markets outside London and significant growth in core London markets … offset by a reduction in activity in the prime market within central London.”
However, transaction volumes were up - a rise of 29 per cent in London and six per cent outside.
“The average value of London residential property sold by Savills in the period was down 32 per cent to £2.1m … The average transaction value outside London grew marginally to £1.17m” the report continued.
Revenue from sales of new homes was 10 per cent down on the first half of 2018 and although new homes reservations in the first half of this year remained roughly constant, exchanges declined 12 per cent “reflecting an increase in the time taken to transact in current markets.”
The 44 per cent plunge in underlying profits for this division of Savills meant the profit in the first half of last year, £6.3m, fell to only £3.5m in 2019.
Most of Savills’ income is derived from international consultancy and commercial activity rather than UK residential, but there was no denying the impact of the UK’s problems in comments made in the report by Mark Ridley, the company’s group chief executive.
He said: "In many markets, particularly the UK and Hong Kong, political and economic uncertainty has considerably reduced the volume of real estate trading activity in recent months, although occupier demand remains robust.
“Underlying demand for the secure income qualities of real estate remains high, but these macro uncertainties weigh on investor sentiment and make predictions in respect of near term market activity difficult to determine with accuracy.
“Continued investor demand, restricted supply and expectations of continued low interest rates suggest that, if political clarity emerges, the medium and long term dynamics of the real estate markets in which we operate remain positive.”