What’s bad for slick estate agents is good for working Londoners

Those twice-weekly sales emails from Foxtons that the recent GDPR clean-up has failed to stop have lately been spattered with the words ‘recent price reduction’ in big red capitals. Hence no surprise that the glossy estate agent and bellwether of London residential property has just reported a first-half loss of £2.8 million, compared to £3.8 million profit in the first half of last year and reflecting a sharp drop in sales revenues. Chief executive Nic Budden says his marketplace ‘is undergoing a sustained period of very low activity levels’.

Foxtons’ flotation in 2013 at an absurd valuation of £650 million was the strongest possible indicator of overheating house prices at the time; likewise, its £360 million sale by founder Jon Hunt to private equity investors at the very peak of the previous boom in 2007. Today its market capitalisation is just £140 million, the shares having been on a downward slide since stamp duty rises began to bite in 2015.

Brexit nervousness has been partially counterbalanced by a continuing influx of ‘safe haven’ buyers from other parts of the world, but the price of an average home in the capital has at last begun to drift downwards (as opposed to merely rising more slowly, the second-quarter fall having been 1.9 per cent according to Nationwide) and is expected by many pundits to continue falling until 2020. The interest rate rise widely expected this week will reinforce that trend.

But so far we’re talking about a correction, not a crash. Homeowners who bought before the last spurt of the rise should still be in the money, while first-time buyers have a slightly better chance of scrambling on to the property ladder. Not that I’m prejudiced against slick estate agents, you understand, but what’s bad for Foxtons is on the whole likely to be good for working Londoners.