Countrywide profits tumble as its house sales suffer 25 per cent fall

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The Independent Online

Countrywide Assured, owner of the UK's largest estate agency chain, yesterday said its number of house sales had slumped 25 per in June and July compared with a year ago.

Countrywide Assured, owner of the UK's largest estate agency chain, yesterday said its number of house sales had slumped 25 per in June and July compared with a year ago.

The group's shares fell almost 15 per cent yesterday, as the board predicted a similar fall would be seen this month.

Countrywide, which yesterday unveiled a 27 per cent fall in pre-tax profits to £20.9m for the six months to 30 June, said it would consider bids if its share price fell below 100p, although it said it has not been approached. The shares closed down 17.5p at 102.5p, valuing the company yesterday at £368m.

However, it is thought that directors, who currently do not own a significant holding in the business, will start to buy up chunks of stock if shares hit 100p to bolster the price.

Countrywide's figures also suffered from a fall in sales of endowment mortgages, which have been a lucrative contributor to its other business division. Countrywide acts as a broker for mortgage providers including Halifax and Nationwide.

Harry Hill, chief executive of Countrywide, admitted that the house-selling business had gone "pear shaped", but tried to stave off a further crisis of confidence by investors. He said: "Buying volumes and prices will stabilise later this year. There won't be a crash."

Countrywide, which controls 7 per cent of the UK estate agency market, also claimed the whole sector was experiencing a similar fall in demand.

The company said that, while official figures show the number of registered new-home owners was down by only 9 per cent in July compared with last year, Countrywide's figures reflected the number of offers made during the period. These offers come a few months earlier in the house-buying process and indicate future trends.

The fall in endowment sales follows widespread criticism of the products' expensive up-front charges and their failure, in some cases, to fully pay off home loans. But Christopher Sporborg, chairman of Countrywide, said his firm would continue to offer the product. "When members of Parliament and certain sections of the media say selling endowments should be stopped they are making stupid and irresponsible remarks and not looking at reality," he said.

Analysts said yesterday that the group's move into new mortgage products in May, which offer a repayment as well as an endowment element, was a positive step.

However, one analyst who follows the sector said: "They made the move too late, and also continue to sell traditional endowments, which have no future."

The analyst said it was unlikely Countrywide would find itself in a bid situation. He said: "It is difficult to see who would buy it - the types of companies big enough, like life insurers, are all moving out of the estate agency business."

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