Transactions at Savills down 45% on year

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by Kay Murchie

Estate agent Savills is due to report its first-half results later this week and is expected to announce that transactional volumes have slumped by 45% compared with a year ago.

Savills, which is one of the largest property agents in the UK, has undergone a cost-cutting programme which involved redundancies and the reduction in its advertising budget.

According to reports, Jeremy Helsby, Savills chief executive, has informed staff that he expects house prices to fall by 25% by the end of next year.

However, Mr Helsby did say that he believes property prices in the capital will return to 2007 levels by 2012.

Since the start of the credit crunch last summer, sales of homes worth more than £1 million have come to a virtual standstill. This is primarily due to the extent of job losses in the City and investment bankers having their bonuses slashed.

In the last year alone, Savills has seen its share price plummet by 50%. Analysts at the group’s own brokers at ABN Amro are forecasting that profits will fall considerable for the whole year and that the dividend will be frozen.

Other estate agents feeling the force of the housing slowdown include Halifax, who recently announced it is to close 53 of its estate agency branches following a decline in the number of house sales made over the last 12 months.

Furthermore, the new owner of estate agent chain Foxtons, private equity group BC Partners, has called in investment bank, NM Rothschild, to deal with a mountain of debt.

Last year, BC Partners borrowed £390 million from Bank of America and Mizuho prior to both the capital markets and the housing sector downfall last year, which left the group facing repayments of £26 million a year.

The average price of a home in the UK was £177,351 last month, down from £199,084 in July last year.

Savills, which has been established for 160 years, specialises in the higher end of the market and has a workforce of 17,000 people worldwide. It currently has 111 offices in the UK.