The property market is a bit like a dodgy air conditioning unit – it makes a lot of noise and never pleases everyone. It’s either too hot (help, we’re getting into another bubble) or too cold (oh no, negative equity). Right now, it’s not exactly clear which state we're in.
There was a definite rush of cool air this morning from three firms connected to the market. High end estate agent Foxtons said high prices and the adverse impact of stamp duty changes on expensive properties is causing sluggish transaction levels in its core central London market, leading it increasingly to brave the wilds beyond Zone 1.
Never mind that its revenues rose 8.8% to £43.5m for the quarter to the end of September or that its full-year profit guidance remains unaffected. Shares in the estate agent fell 5.6% to 209.1p by lunchtime.
Things weren’t much better in the building supply business. Travis Perkins, which owns the Wickes home improvement stores and BSS heating supplies, said like-for-like sales growth slowed to 2.6% for the same period from 5.7% in its first half, as demand lagged. Again, despite it still growing and pointing to an optimistic start to the fourth quarter, this gave investors the chill. Shares fell 5.8% to 1,849p.
Finally, mid-cap roofing firm SIG issued a profit warning, lowering its full-year guidance by 18% to between £85 and £90m following an unexpected if modest dip in revenues over the summer. Its shares fell 22.2% to 138.8p.
Much like cows lying down in glorious sunshine, all this might appear as a harbinger of stormier weather to come, but the harder data remains mixed – especially when you consider that the UK has many overlapping housing markets, rather than just one, and that monthly fluctuations can mask longer term trends.
Halifax said recently that UK property prices rose only 2% in July-September on the previous quarter (cool), while Rightmove said average asking prices for first time buyers were up nearly 10% in October from last year (hot). The Council of Mortgage Lenders meanwhile said lending in August was down 9% on July, but up 10.7% year on year (bit of both). Maybe cows would be a more useful predictor than house price data after all.
There was a summer lull and there may still be a slowdown in some areas, but there’s little sign of a collapse either. Long term, with demand rising and supply remaining limited, the only way is up.