City analyst uses Foxtons' figures to diss Purplebricks inventory

A respected City analyst has pointedly dissed Purplebricks over its allegedly modest inventory of homes for sale and rent.

Antony Codling of Jefferies has analysed the quarterly trading statement of London agency Foxtons, released yesterday.

In disappointing figures for the first quarter of this year - made worse by comparison with early 2016’s extremely high sales volumes ahead of the additional stamp duty surcharge - the agency says revenue has dropped to £28.7m from £38.4m in the same period last year.

However, Codling says that the real challenge to Foxtons is from the market - not from what he calls ”the new wave of hybrid agents.”

He writes in a note to investor clients: “Disruption in the London estate agency market remains muted. Foxtons is reassuringly expensive with fees at 3.0 per cent including VAT, equating to £14,250 on the average London home - some 12 times greater than the Purplebricks base fee of £1,199.”

He then adds that at the end of business on Tuesday of this week Foxtons had 9,817 properties advertised for sale or rent, compared to Purplebricks at 1,101.

“It appears to us that competition is not just about fees” says Codling, in a message emphasising the relatively high level of business Foxtons has retained despite its premium cost model.

In addition to the 25 per cent revenue slump, Foxtons’ figures show that sales commissions had almost halved from £20m to £11.1m; lettings revenues held up much more strongly, dipping just £300,000 to £15.5m.

In March, Foxtons revealed that full-year profits for 2016 dived dramatically from £41m to £18.8m.