Savills reports 88% fall in profits

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by Kay Murchie

As the housing slowdown continues, many industries have been suffering, particularly estate agents.

Savills, which is one of the largest property agents in the UK, has reported that profits plummeted 88% during the first six months of the year.

During the same six month period, revenues were down 22% to £105.3 million while underlying pre-tax profits at the agent’s core division fell to £2.5 million compared with £20.9 million in the same period last year.

The news comes as the Nationwide revealed that the average house price has fallen by 10.5% over the last year – this represents the fastest fall since 1990.

Savills, which specialises in the higher end of the market, said a reduction in its workforce would have to be implemented in order to cope with the downturn.

A recent survey carried out by the National Association of Estate Agents (NAEA) established that 98% of its members blamed the Government’s indecision on stamp duty for the ongoing slowdown in the housing market.

Since the Government announced it was considering a possible suspension of stamp duty on house purchases, 56% of estate agents said they had lost at least one sale.

Peter Bolton King, the NAEA’s chief executive, said this is unacceptable and action needs to be taken.

The NAEA has been urging the Government to hold a round table discussion to find real solutions to stamp duty, the mortgage squeeze, first-time buyers and repossessions.

In related news, last week Blenheim Bishop estate agent, based in Mayfair, London, announced it is to close its doors on sales but will continue to let properties.

The founder of the agency, Jonathan Vandermolen, said income from new homes was 75% down compared with the previous year and he is of the opinion that the market is not good long-term.

As a result, the agent will cease to sell homes and has put offices on the market and made 10 staff redundant.

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.