Shares in Foxtons plummet after CEO warns of a cooling market

Shares in estate agency Foxtons have plummeted after the company’s chief executive warned that the housing market has started to “cool”.

In its half-year results, published last week, the group posted a 57 per cent increase in pre-tax profits from £14.7m to £23.1m as revenues rose by 16.2 per cent from £62.6m to £72.8m.

But shares in the estate agency fell after chief executive Nic Budden said regulatory changes introduced this year, including the Mortgage Market Review and the incoming cap on income multiples, were beginning to impact the market.

Budden said: “The range of policy initiatives aimed at controlling mortgage lending, together with the expectation of early increases in interest rates, is now having an impact on short term demand among buyers.

“Consistent with others in the sector, we expect this to lead to lower rates of market growth in both property sales transactions and prices during the second half of the year.”

Despite a 32 per cent increase in sales revenues from £28.5m to £37.8m in the first half of 2014, Budden adds that “most recent data from the Land Registry suggests the market has cooled a little over the past couple of months”.

Following the announcement, the group’s share price fell from its opening high of 293.5p to 260.4p before recovering slightly at the close of trading. At the time of writing, the share price had fallen further to 252p. Foxtons floated on the stock exchange in September at an initial price of 230p.