Shares in Foxtons fell yesterday after the firm issued a trading update which said that revenue in the first quarter of this year was down £10m on the same period last year.
Group revenue in the first three months was £28.7m compared with £38.4 in the first quarter last year.
Sales were particularly badly hit, falling to almost half of the revenue brought in during the first quarter of last year, while letting revenues held up.
The firm nevertheless said that the first quarter’s performance was in line with the board’s expectations.
Foxtons pointed out that there were record sales volumes in the first quarter of last year, when a number of transactions were brought forward ahead of the Stamp Duty surcharge on buy-to-let investments and second homes.
First quarter revenues were: sales £11.1m, compared with £20m in the same quarter last year; lettings £15.5m, compared with £15.8m; and mortgage broking fees £2.1m, against £2.6m.
City analyst Anthony Codling of Jefferies said: “It is clear that Foxtons is facing both a tough market and tough comparatives following last March’s Stamp Duty stampede, with revenues down 25%.
“However, trading is in line with the board’s expectations and revenues are balanced across sales (39%), lettings (54%) and mortgage broking (7%).
“The challenge, in our view, is the market rather than the new wave of hybrid agents.
“Disruption in the London estate agency market remains muted.
“Foxtons is reassuringly expensive with fees at 3% (inc VAT) equating to £14,250 on the average London home, some 12 times greater than the Purplebricks base fee of £1,199.
“However, at close of play yesterday Foxtons had 9,817 properties advertised for sale or rent, compared to Purplebricks at 1,101.
“It appears to us that competition is not just about fees.”
Yesterday, Foxtons’ shares ended the day at 102p, down some 3.5%, with a market capitalisation of some £292m – less than a third of that of Purplebricks.
Last year, Foxtons delivered pre-tax profits of £18.77m. The firm has no debt.