ADVERTISEMENT

News

LSL shares are down 10% as it warns of falling home sales

ADVERTISEMENT

Shares in real estate group LSL fell after a profit warning from Your Move owner as home sales slow and cancellations rise

  • Business conditions more ‘challenging’ due to rising rates and uncertainty
  • LSL reported a decline in mortgage activity and new home sales
  • It has also seen an increase in the previously agreed drop in sales

LSL Property Services has warned that full-year earnings will be lower than expected due to a slump in demand and a decline in sales.

The group behind brokers Your Move and Reads Rains said trading conditions have become “more challenging” since the first half, with rising interest rates and political uncertainty hampering the housing market.

“This has led to a reduction in mortgage activity and new home sales and a drop in foreclosures across the market,” CEO David Stewart told investors Friday.

LSL blames disruption from September’s mini budget and higher mortgage rates for the slump in new home sales

Group turnover in the ten months to the end of October was slightly higher at £276.1m, thanks to a strong performance from the surveying division, but the brokerage business saw a 6% drop.

The company, which also provides advisory services to mortgage brokers, now expects the performance of the group as a whole to remain below previous expectations.

It said full-year earnings are expected to be “in the upper or lower range of 2019,” after previously forecasting a strong performance.

LSL shares fell 11 percent during afternoon trading on Friday to 233 pence, sending the stock down almost 44 percent from a year ago.

“The housing market is heavily influenced by sentiment and there is the potential for a reverse surprise,” the group said.

Also read  Miami nightclub owner is facing declining sales after losing top-spending crypto clients in the wake of the FTX and cryptocurrency boom, reports say.

“However, with the recent decline in activity levels and continued uncertainty about economic conditions in the UK, we remain cautious on the market outlook for 2023 until we have more clarity on the economic backdrop.

“A significant reduction in the number of residential transactions would clearly have a material impact on our real estate agent sales business and our direct-to-consumer financial services business.”

The update echoes a recent study by Aviva that found that the cost-of-living crisis has forced more than a million hopefuls under the age of 45 to suspend their plans.

September’s disastrous mini-budget and the resulting rise in mortgage rates have repeatedly been blamed for the housing market slump.

Last week, Zoopla reported a £4,000 drop in average home asking prices between October and November.

And said the sharp rise in borrowing costs due to the mini-budget contributed to the slowdown in market activity that had already begun in the summer.

advertisement

Popular affluence classes take me to…

Source: www.dailymail.co.uk

ADVERTISEMENT

ADVERTISEMENT

Leave a Comment