Not a good day for Foxtons shareholders. Shares fell 2.4 per cent in early trading as the upmarket estate agent - known for its trendy Minis and even trendier, bar-like offices - has posted fourth quarter results showing revenues fell 12 per cent in the three months to the end of December. That was driven by a 25.7 per cent fall in sales commission during the quarter - although it added that full-year sales commission rose 3.6 per cent to £70m.
There was some good news: Its lettings business rose 7.7 per cent year-on-year, which "exceeds the long term growth trend" of six per cent. The lettings business now makes up half of group revenue.
Alas, it wasn't enough to shore up adjusted earnings before interest, tax, depreciation and amortisation. The company said it expects that figure will fall to £46m, down from £49.6m in 2013.
That hasn't stopped it from planning to raise its divi, though. The company said it expects to propose a special divident of £14.5m (5.16p per share) - up from £12.8m (4.54p per share) last year.
Why it's interesting
Even as recently as a year ago, London's luxury residential property market - in which Foxtons specialises - was the toast of the market. Never was that more clear than when Foxtons floated in September 2013, listing at 230p and closing up 16.1 per cent at 267p on the first day of trading.
But luxury residential - or Prime Central London property, as it's known to its friends - has become the casualty of politicial headwinds. First came the Bank of England's Mortgage Market Review (MMR), which limited the amount mortgage customers could borrow to 4.5 times their income - and particularly hit buyers in London. Then came George Osborne's so-called "stealth mansion tax", in the form of reforms to stamp duty forcing buyers of properties worth more than £1.5m to pay 12 per cent on top of that.
What Foxtons said
The long term fundamentals of the London market remain sound. We are firmly committed to our organic growth strategy which will see between five and ten new branches each year. All our new branches are performing as we expected, with many of those branches located in areas outside the centre of London showing growth and having average selling prices that benefit from the recent stamp duty changes.
Those whose focus was on the Central London residential market are beginning to feel the heat. For Foxtons, that takes the form of a drop in share price of almost 50 per cent since this time last year.