Savills: Property market appears to be past “peak uncertainty”

Savills has claimed most of the property markets It operates in are past “peak uncertainty” after posting lower revenues and profits for 2023.

The agency and property brand’s 2023 annual results show group revenue fell 3% annually to £2.24bn while pre-tax profits declined by 42% to £94.8m due to “challenging markets driven by less transactional service lines.”

Its less transactional businesses such as property management and consultancy posted increased revenues but its residential markets dragged down the results.

In the UK, residential transaction revenue decreased by 18% to £171m, which was attributed to decreased market volumes amid interest rate rises and a drop in mortgage approvals.
Second-hand sales revenue declined by 23% with a reduction in the number of exchanges of 23% to 4,735. 

This was exacerbated by a decrease in the average sales value by 4% to £1.61m, according to the annual report.

In London the average lot size transacted by Savills was down 3% to £2.23m and by 8% to £1.27m in the regions. Volumes in both the regional UK market and central London declined significantly, but consistent with expectations, Savills said.

Revenue from the sale of new homes reduced 24% year-on-year, reflecting a decrease of 27% in the number of exchanges, much of which occurred in the regional markets outside London.

Overall, underlying profit for the UK market reduced by 45% to £19.4m.

An outlook from Savills in its annual report said:  “Savills resilient performance in 2023 highlights the diversity and strength of our global business. In the context of extremely challenging real estate markets, which saw the lowest levels of transaction volumes for a decade, our less transactional businesses have provided a solid platform for the Group with a resilient and growing earnings stream.”

With increased expectation of a reduction in the cost of capital during 2024, Savills said it expects re-financing driven activity to be positive for transaction volumes.

The agent added: “Current economic and geopolitical conditions remain uncertain and although we expect this to continue for some time, most markets appear to be past the moment of peak uncertainty. “There are some early signs of underlying market improvements, which should set the course for a broader recovery during the second half of the year and into 2025.”

https://www.investegate.co.uk/announcement/rns/savills--svs/final-results/8086800