The British real estate market has recovered strongly, according to real estate agent Foxtons. Rents were almost at the pre-crisis level and sales increased significantly in April and May.
At the height of the coronavirus crisis, activity declined sharply as estate agents closed their offices and social detachment measures made physical inspection impossible.
London-based Foxtons said Tuesday that the market recovered quickly in June and July.
“Behind the Covid fog there is still a big appetite for the property market,” said Foxtons CEO Nic Budden, who added that he was “cautiously optimistic” for the rest of the year, with low interest rates and that Stamp vacation tax contribute to maintaining demand.
He believed that the market has been subdued has had “significant recovery benefits” since the Brexit vote.
Foxtons reopened its offices and resumed visits in June, though its agents still can’t transport customers in its striking green minis. “It’s a crease we want to iron out with the government,” said Budden.
His comments came when Foxtons reported its first-half results. Revenue decreased 22 percent to £ 40m as the crisis weighed on both rental and revenue. The pre-tax loss increased from £ 2.5m to £ 4.3m.
Almost two-thirds of the company’s revenue comes from rentals that are less cyclical than sales because they include regular fee income.
Foxtons rental commissions are now only 3 percent lower than last year. At the height of the crisis, commissions fell 45 percent.
In May, sales commissions fell 61 percent from a year earlier, this month it was down from 32 percent in July 2019.
“We were able to weather the storm better than expected,” he said. “Many of our competitors closed the shop and literally put their phones on voicemail.”
Numis analyst Chris Millington said Foxtons’ results “were resilient in the face of the challenges it faced”.
The company’s shares rose 3 percent to 38p on Tuesday morning in response to the numbers, but are still 45 percent below their position in January.
Foxtons Collected £ 22m in a share placement in April and ended the period with £ 40m net cash.
“We don’t think it makes sense to have a lot of debt in a cyclical market like ours,” said Budden. “We’ll always be fairly conservative on the balance sheet. I normally want £ 10-15 million in cash. Today I want a little more.”
He said the money would allow Foxtons to invest in technology and also buy books on competitor rentals. “Now is a good time to buy because valuation levels are pretty low.”