Foxtons said it has been hit by falling volumes in central London as stamp duty pressures put off buyers.
Although revenues grew 4.1 per cent to £149.8m in the year to the end of December, pre-tax profits fell 2.6 per cent to £41m, Foxtons said this morning.
But sales revenue rose 3.4 per cent to £72.2m as the number of units it sold rose 4.4 per cent to 5,558. It's a sign of the times, though, that revenue per sales unit fell one per cent to £12,990.
At its lettings unit, revenue grew 2.3 per cent to £68.9m, with revenue per letting unit rising 4.1 per cent to £3,357 - despite the number of lettings it made falling 1.7 per cent to 20,539.
The company nevertheless managed to hike its total dividend for the year by 13.4 per cent, to 11 pence per share.
Foxtons shares were up 0.16 per cent at 158.5p in early trading.
Why it's interesting
Foxtons' decision to focus on central London's most exclusive areas probably felt like a good idea at the time - but as the chancellor attempts to crack down on ultra-expensive homes, things are looking less certain.
The company has already been hit by a quasi-mansion tax which hit homes worth £1m plus and £2m plus - and now new changes to stamp duty mean from April, those buying second homes will be forced to pay an extra three per cent stamp duty.
And although there's some evidence prime property in London is experiencing something of a dead cat bounce as investors try to squeeze in transactions before the changes are implemented, there has also been suggestion demand for luxury homes will fall further this year - and won't recover until 2018. Add to that uncertainty around Brexit and turmoil in international markets, and it looks like Foxtons' bread and butter is at risk of going a little stale.
The good news is that with London homes out of reach for the majority of would-be buyers, the company is doing a roaring trade in the lettings market. And it's worth pointing out it plans to open seven new branches in 2016 - so it clearly expects this uncertainty to be more of a blip than a permanent state of affairs.
What Foxtons said
Chief executive Nic Budden said:
Looking ahead, the London residential property market continues to be highly attractive both in terms of sales and lettings although it is too early to predict how transaction volumes may be impacted by recent changes to the tax regime and the short term political and economic uncertainty caused by the UK referendum on leaving the European Union. We have entered the new year with an encouraging sales pipeline, a strong lettings book and a clear strategy for further growth through our organic branch expansion.
What other people said
Julie Palmer, partner at Begbies Traynor, said:
Foxtons has delivered a solid performance in a tricky market with London property transactions significantly lower than last year and recent changes to stamp duty having dampened demand for higher value houses.
But the real question for investors is whether it can return to higher levels of growth in the face of global economic turmoil, uncertainty around Britain's future in the EU, the abolition of mortgage interest relief for buy-to-let investors and amid continued headwinds to transaction volumes in the capital or whether the recently announced buy back programme is an admission by management that it needs other routes to deliver shareholder returns.
Not an easy time to be an estate agent focused on London's more exclusive areas - but Foxtons has done what it can.