A sign of things to come? Countrywide shares leap despite pre-Brexit housing market slowdown
The UK's largest estate agent said it had been hit by a slowdown in housing transactions in the run-up to the EU referendum. Is this a sign of things to come?
The figures
Countrywide said adjusted pre-tax profits fell 25 per cent to £21.8m in the six months to the end of June, although total income rose nine per cent to £370.3m.
Adjusted earnings per share fell 22 per cent to 8p, leaving its interim dividend flat, at 5p.
That said, actual exchanges rose, with house sales rising 10 per cent to 33,940 during the period. Even in London, where house price growth has been weak in recent months, transactions edged up by two per cent, to 5,476.
But having dipped in early trading, shares in the company leaped more than 15 per cent to 282.5p as the morning wore on.
Read more: Everything that's happened in the UK property market since the Brexit vote
Why it's interesting
The once-flourishing housing market has taken something of a hit in recent months, after new stamp duty rules put off buy-to-let investors, particularly in the capital, while uncertainty over the EU referendum caused buyers to hold off.
Those stamp duty rules came into effect in April – and Countrywide, which owns high street brands such as Hamptons International and Bairstow Eves, said today that while sales beforehand had been "buoyant", in the aftermath, things had been rather less so: "Post EU referendum vote, commercial and London residential transactions stalled," it said.
That was reflected in the share prices of property sector companies from housebuilders to contractors. Countrywide's shares have lost 30 per cent of their values since the Brexit vote.
But figures out this morning from Nationwide suggest the UK's housing market will weather the storm: prices rose 0.5 per cent between June and July, and 5.2 per cent since July last year.
What Countrywide said
Chief executive Alison Platt said:
We took a cautious view of the months leading up to the EU referendum and beyond. In the event, we saw a slowdown in our retail and London residential businesses and, since the EU referendum result this has become more marked in London, the South East and expensive prime markets.
This period of uncertainty will inevitably impact the level of transactional activity in the second half of the year and, although it is too early to quantify accurately, we will not meet last year's result at the ebitda level.
Notwithstanding this, and following the significant investment we made in the business in the second half of 2015, we continue to make real progress in executing our strategy.
In short
The UK's largest estate agent has been hit by the Brexit vote, but expects to pull itself back up.