M Winkworth has identified the September 2022 mini-Budget of former prime minister Liz Truss and then chancellor Kwasi Kwarteng for a downturn in the UK housing market and its annual trading in 2023.
The estate agency group said it expects pretax profit to meet market expectations, despite a fall in completed sales in its network.
The company announced yesterday that its 2023 profit is expected to be in line with the current market forecast of £2.1m, down from £2.5m a year earlier.
Winkworth said that while rising interest rates had an adverse impact on the UK property market, prices ended the year just 5% below their peak in summer 2022, though buyer hesitancy and legal delays in conveyancing led to network completed sales falling by around 19%.
A substantial number of already agreed and contracted sales will now be reported in 2024 and, with activity in Q4 2023 showing a year-on-year improvement, we have entered the New Year with a stronger pipeline than at the end of 2022.
The shortage of rental property in 2023 and consequent rise in prices translated into an increase in our network revenues of around 5%, offsetting the slower sales completions.
The company believes the increase of accidental landlords, postponing their sales due to price uncertainty and switching to the lettings market, combined with tenants hitting affordability ceilings, will lead to lower growth in 2024 and slowing rent increases. Price increases from previous years, however, will continue to feed through as properties come up for re-letting, underpinning growth in the sector.
Winkworth’s full year pre-tax profits, subject to audit, also reveal that net cash at year end, following increased investment in new offices in 2023, is expected to be at least £4.4m (31 December 2022: £5.25m). The company is likely to announce its final results for the year ended 31 December 2023 on or around 17 April 2024.
Dominic Agace, chief executive officer of Winkworth, commented: “With inflation seemingly under control and interest rates peaking, we enter 2024 feeling more optimistic than this time last year. Winkworth has a well-balanced revenue flow between sales and lettings and improved conditions in the former would counterbalance any slowing in the latter. After opening four new offices in 2023, we are in negotiations for some eight additions in 2024, in line with our long-term target.”
I blame Liz Truss for the recent bad weather. Good grief what a ridiculous claim from Dominic Agace. If I was one of his clients, I’d be looking for another agent.
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If you can’t see the link between Liz Truss, her ‘mini budget’, the subsequent 15 consecutive base rate hikes and resulting carnage in the property market, then I’m not surprised you think she’s to blame for the recent bad weather.
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None of her suggestions were enacted because the money men had her removed. I feel sorry for you that you cannot, or will not see, that she was not the cause. No doubt you think Sunak is doing a fine job and the dangling of tax cuts, inheritance tax etc have no connection with the forthcoming election.
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My mistake. It was 8 hikes but 14 quarter point increases.
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Rates were going to go up anyway. Liz was just the fall guy.
The Bank of England was too slow to raise rates. They have now been raised too high and for too long. The bank of England has been negligent with the sale of bonds and are at fault. Its caused a completely dead housing market.
I was told about a new homes builder who sold a 5 bed for £1.8m before the crash and have just completed on an identical house for £1.2m. That’s some difference.
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