Savills shares plunge after London house prices down 7.5%

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by Kay Murchie

Exclusive estate agent, Savills, saw its shares plunge 14% in early trading today after it said the housing downturn is now having an impact in central London as house prices have fallen 7.5% this year in the capital.

The agent also said transaction volumes were down 45% year-on-year in the first half of 2008.

Savills, which is one of the largest property agents in the UK, said only the very high end of the market (where property values are over £5 million) were immune to the slowdown.

Chief executive, Jeremy Helsby, is expecting prices to fall a total of 25% by the end of 2009 as the freeze in mortgage lending continues.

Mr Helsby added that the group has been shedding jobs across the country. The company employs 1,600 staff.

According to Mr Helsby, the housing downturn is far from over. At the start of the year, the group was much more confident but the trends are now showing otherwise.

Savills said deteriorating conditions in other parts of its business made predictions for profits this year very difficult.

Furthermore, rental growth, which up until now has been strong, was subdued in most sectors in the first 6 months of the year. However, tenant demand remained strong, said Savills.

In related news, this morning housebuilder Persimmon confirmed it is to axe 1,100 full-time workers and 900 flexible workers, cutting its total workforce from 5,000 to 3,000.

It brings the sector’s job losses total to 4,500 so far this year.

Persimmon also said home completions had plummeted by 31% and revenue fell by 34% in the first half of this year.

In a trading statement, Persimmon said it is facing its most challenging period in its recent history and said the reduced availability of mortgage funds and a reduction in consumer confidence were to blame.