Tuesday 23 October 2018

Savills cautions over cooling housing market despite 2017 profits hike

The group reported a 3.5% rise in underlying pre-tax profits to £140.5 million for 2017, with revenues up 11% to £1.6 billion.

Estate agent Savills has cautioned over a slowdown in the housing market (PA)
Estate agent Savills has cautioned over a slowdown in the housing market (PA)

By Holly Williams, Press Association Deputy City Editor

Estate agent Savills has cautioned over a slowdown in the housing market, but cheered the resilience of its UK arm to post rising annual profits.

The group reported a 3.5% rise in underlying pre-tax profits to £140.5 million for 2017, with revenues up 11% to £1.6 billion.

On a bottom line basis, pre-tax profits leapt 13% higher to £112.4 million.

We anticipate a tempering of the strong transaction volumes of recent times in some markets Jeremy Helsby, group chief executive

Savills warned that while it had made a “solid start” to 2018, the property market was set to cool down over the year ahead.

Jeremy Helsby, group chief executive of Savills, said: “We anticipate a tempering of the strong transaction volumes of recent times in some markets.”

This comes against a “backdrop of heightened market uncertainty, geopolitical risks and rising interest rates”, he added.

He said the group was keeping its guidance for 2018 unchanged “at this early stage of the year”.

The group had already upgraded its full-year expectations in January after enjoying a stronger-than-anticipated finish to 2017.

It said it had put in a resilient performance in the UK amid “challenging” conditions in a number of its markets.

House price growth has been easing in recent months, with central London the worst hit.

This has taken its toll on rivals such as Foxtons, which last month revealed full-year pre-tax profits tumbled 65% to £6.5 million in 2017 and said activity in London was at “near historic lows”.

As well as the property market slowdown in the capital, the sector has also been hit by a stamp duty hike in 2016 on buy-to-let properties and second homes.

Savills said its UK residential sales division saw a 7% rise in underlying profits to £18.7 million as revenues grew by 4% to £128.9 million.

It saw property prices fall in the second-hand homes market in London, although this helped drive a 4% rise in the number of exchanges.

Outside the capital, property prices moved higher, which led to a 5% drop in exchanges, it added.

The star performers for the group were its Asia Pacific arm, where profits rose 31% to £55.6 million, while North America suffered a 59% plunge in profits to £7.8 million and Continental Europe also saw a decline – down 17% to £11.2 million.

Analyst Chris Millington, at Numis Securities, said: “In 2018 we expect US profits to bounce back due to less cost headwinds, and profit growth in Europe and the less-transactional businesses.

“This is expected to offset our expectation of tougher transactional markets in the UK and Asia and lead to a flat profit profile overall.”

Press Association

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