The shares of Foxtons (LSE: FOXT) sank 9p to 307p during early trade this morning after Michael Brown, the estate agent’s chief executive, expressed caution about the London housing market.
Mr Brown said that although he remained confident about Foxtons’ prospects for the rest of 2013, he did not expect to see “a significant upturn in London property sales transactions“.
Mr Brown also believed the benefits of the government’s help to buy initiative and signs of increasing mortgage activity would “materialise slowly“.
His comments accompanied a third-quarter update that showed Foxtons’ sales up 18% to £41m. Revenue from property sales climbed 28% while letting income gained 9% and mortgage turnover advanced 64%.
Group adjusted earnings before depreciation, interest and tax for the nine months to 30 September rallied 23%. Margins for the nine months were 36%, up from 33% last year and reflected the “economies of scale and operational leverage inherent in Foxtons’ centralised business model“.
Mr Brown said the third quarter had showed an “encouraging performance“, fourth-quarter trading had “started positively” and the group was now debt free following its September flotation.
However, Mr Brown did say fourth-quarter profits would be impacted by the opening costs of two new branches plus the higher ongoing costs of operating as a public company.