LSL Property Services has warned full-year profits will be lower than expected after witnessing a slowdown in demand and an increase in sales falling through.
The group behind estate agents Your Move and Reeds Rains said that since its first half, trading conditions have become ‘more challenging’ due to rising interest rates and political uncertainty disrupting the housing market.
‘Across the market, this has given rise to a reduction in mortgage activity and new house sales, and an increase in fall-throughs of previously agreed sales,’ chief executive David Stewart told investors on Friday.
LSL blamed disruption created by September’s mini-budget and higher mortgage rates for a slowdown in new house sales
Group revenue was slightly higher at £276.1million in the ten months to the end of October, thanks to a strong performance within its surveying arm, but its estate agency business saw a 6 per cent decline.
The company, which also provides advisory services to mortgage brokers, now expects the overall group performance to be below its prior expectations.
It said full-year profit is anticipated to be ‘in a range just above or just below that reported in 2019’, having previously forecast a stronger performance.
LSL shares tumbled 11 per cent to 233p in afternoon trading on Friday, leaving the stock down almost 44 per cent compared to a year ago.
‘The housing market is heavily impacted by sentiment and has the potential to surprise on the upside,’ the group said.
‘However, with the recent reduction in activity levels and continuing uncertainty over UK economic conditions, until we have greater clarity on the economic backdrop, we are cautious on the market outlook for 2023.
‘A significant reduction in housing transactions would clearly have a material effect on our Estate Agency residential sales business and our direct-to consumer financial services business.’
The update echoes as recent survey by Aviva, which found that the cost-of-living crisis has forced more than a million hopeful first time buyers under 45 years old to put their plans on hold.
September’s disastrous mini-Budget and the consequent jump in mortgage rates has been repeatedly blamed for a slowdown in the housing market.
Last week, Zoopla reported a £4,000 fall in average house asking prices between October and November.
And said that sharp hike in the cost of borrowing triggered by the mini-Budget sped up a slowdown in market activity that had already started in the summer.
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