In the week that saw housing transactions rise again, for the fifth month in a row, the Twindig Housing Market Index rose for the first time in April this week, increasing by 2.3% to 80.2, its highest level since the 26 February 2022.
This week two large estate agency groups, Foxtons and LSL released positive statements. The London based agent Foxtons published a positive Q1 trading update reporting that its sales under offer pipeline entering Q2 was 8% ahead of the prior year, no mean feat when the stamp duty holiday was in full swing this time last year. They also said that their lettings revenues had seen 10% Organic growth, as WFH (Working From Home) transitions into the hybrid WFHOA (Working From Home And the Office) rental demand continues to outstrip supply. It will be tough for Foxtons, or indeed any agent, to beat their bumper stamp duty holiday fuelled results from last year. However, if we strip out the stamp duty holiday impact, the underlying business is performing well, in our view.
Meanwhile, national estate agency Group LSL whose brands include Reeds Rains, Your Move, Marsh & Parsons and Thomas Morris announced the start of a £10m share buyback programme. A share buyback is a way to return cash to shareholders, LSL says that they will be returning excess capital. This is a positive sign. Firstly it suggests they are not worried about the future and they need less money in the back for a rainy day, and secondly, LSL is in the early stages of a significant growth plan. One might argue that this cash is required to fund the growth strategy, however, in our view it points to the strong cash generative nature of their estate agency business that their ambitious plans can be made with cash to spare.
Finally this week Housing Secretary Michael Gove said that even the most Thatcherite of homeowners would agree we need more social housing to address our current housing emergency, we agree that the UK housing market needs some medicine, but we would encourage Mr Gove to think outside of the box and consider fractional ownership and how we finance buying homes as well as how many homes we need to build. You can read our thoughts on the housing emergency by clicking the link below: