EU exit to prolong London’s housing woes, says Foxtons

Bloomberg

Foxtons Group Plc forecast lower 2016 revenue and profit as the U.K.’s decision to leave the European Union prolongs uncertainty in London’s residential property market. The shares fell to the lowest since the company’s stock-market debut.
Earnings will fall significantly from a year earlier as “challenging conditions” hurt sales volumes, the London-based property broker said in a statement on Monday.
“The upturn we were expecting during the second half of this year is now unlikely to materialize,” Foxtons said. “As a result, the challenging conditions we referred to in our April 2016 trading update, which have impacted recent property sales volumes, are now likely to continue for at least the remainder of the year.”
First-half revenue will be slightly lower than a year earlier, Foxtons said. The margin on adjusted earnings before interest, tax, depreciation and amortization will be about 20 percent, “primarily due to subdued sales volumes and the costs associated with recent investment in our branch network.”
Foxtons shares fell as much as 20 percent in London to the lowest since the company first sold stock to the public in September 2013. Foxtons was down 19 percent at 109.5 pence at 9 a.m., giving the company a market value of 302 million pounds ($405 million).
Already under pressure from higher taxes, London homebuilders fear the vote to leave the EU will further weaken demand for properties. The U.K. Treasury warned before the vote that residential property prices would be as much as 18 percent lower than if the country stayed in the political bloc.