Countrywide shares tumble after sales slow in July

Countrywide, the UK's larg- est estate agency group, reported its sales volumes plummeted last month as successive interest rate rises took effect.

The company, which trades under agency brands including John D Wood, Bairstow Eves and Mann & Co, reported sales in July were down 25 per cent compared with the same month last year.

Reporting interim results, Harry Hill, the managing director, said although July 2003 was unusually strong, July this year was still disappointing. The interest rate rises seen since November last year had already worked before the fifth increase, this month, took the Bank of England's base rate to 4.75 per cent, he added.

Interest rate levels were undermining consumer confidence in the market and sales agreements had now shown no price inflation for four months, Mr Hill said. "If it [the Bank of England] does much more, it is not a soft landing that we'll get," he added.

Estate agents were in a position to assess the current market, he said, whereas the widely followed figures from the mortgage lenders - which continue to show house price inflation running at about 20 per cent - were historic. Countrywide has by far the biggest network of agencies across Britain, with more than 800 offices.

July and August were traditionally quiet. It would only be possible to see if the fall in July indicated a trend when the holiday season was over in September, Mr Hill said.

Countrywide shares were sold off yesterday as analysts revised down estimates for the full year, in case July pointed to conditions for the rest of the year. The stock closed down 11 per cent at 285p, even though Countrywide said its pipeline of new business was "good" at the end of June.

Jeremy Grime, an analyst at Altium Securities, said: "The gearing in Countrywide's earnings arises from the estate agency business. We are cautious about the reference to a strong pipeline as it is flat in estate agency and a feature of a slowing housing market is that transaction times increase, thus increasing the order book."

Aside from the agency business, which provided £125m of the £240m interim turnover, Countrywide also has related financial services, surveying and conveyancing divisions. For the six months to the end of June, pre-tax profits for continuing businesses were up 38 per cent at £30.2m.

Mr Hill described the interim performance as "totally satis-factory". It was the first results statement since the company demerged its life and endowment book of business into a separately listed stock, Chesnara.