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Anthony Hilton: Why this is one housing market to stay out of

 

Anthony Hilton
Saturday 08 June 2013 03:47 BST
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If the way to stay young is to keep repeating your mistakes then the London investment community will surely be blessed with perpetual youth if it buys into the flotation of Foxtons.

The London estate agent announced yesterday that it hoped soon to obtain a stock market listing. It is déjà vu all over again. Every cycle sees a rush of estate agency flotations and they always end in tears.

There are some businesses which should not be listed companies and estate agents are one of them. Their income is linked to the property cycle so is horribly volatile. It is of dubious quality because even in good times there is always a rival who willing to do it cheaper. It is a people business, in a business whose people are disloyal. Every boom sees the best sales teams leave their employer and start up in competition across the street. There are no assets to speak of and no customer loyalty. And finally it is an intermediary when the internet allows people to bypass intermediaries and their extortionate commissions.

The technology means estate agents must surely soon follow travel agents, motor insurance brokers and other like-minded souls down the path to oblivion.

All this does help explain why the owners, a private equity house known as BC Partners, might want to sell. It does not explain why anyone would want to buy.

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