LONDON • Britain's largest property brokers are cutting jobs, closing branches and raising capital even as homes sell for record amounts.
While some companies have blamed Brexit and tax hikes for a drop in transactions, high values have put off other buyers.
Demand for housing dropped to a six-month low in February, according to the Royal Institution of Chartered Surveyors.
The widening gap between home values and wages means brokers, including Countrywide and Foxtons Group, are closing fewer deals while being undercut on fees by online companies.
"It's handy to blame this downturn on Brexit and property tax changes, but prices were overstretched relative to incomes prior to these changes," JPMorgan Chase analyst Tim Leckie said.
British property values have been rising for five years, after the government stoked demand by introducing various programmes. Prices for first-time buyers reached 5.3 times average earnings in the final quarter of last year, just short of the 5.4 times ratio at the market's peak in 2007, according to the Nationwide Building Society.
Countrywide, the country's largest broker, shuttered 200 branches last year, while LSL Property Services cut 21 outlets in the six months to December. The real estate industry as a whole lost 6,000 jobs in the past three quarters, according to Office for National Statistics data published last month.
"We can't see a catalyst for the market improving," Countrywide chief executive officer Alison Platt said on a March 9 call with reporters. The company raised about £38 million (S$66 million) in a share sale earlier this month, which it plans to use to cut debt and improve its digital operation.
Broker Foxtons has fallen almost 44 per cent in London trading since Britain voted on June 23 to leave the European Union. Pre-tax profit fell 54 per cent to £18.8 million last year as property sales dropped by more than a quarter, the firm announced on March 8.
In January, brokerage outlets had an average of 425 prospective buyers on their books and 38 properties for sale, according to a survey of members published by NAEA Propertymark, a lobby group for estate agents. On average, each branch completed eight deals during the month, unchanged from a year earlier.
"The main reason estate agents are having a hard time is due to a shortage of stock to sell and we suspect that with respect to the stock they do have, the sellers' price expectations are unrealistic," said Mr Anthony Codling, an analyst at Jefferies International.