Housing slowdown hits Countrywide

Countrywide Assured, the UK's biggest chain of estate agents, warned yesterday that profits from its house-selling division would fall this year after reporting a 30 per cent decline in new transactions in the first quarter.

Shares in Countrywide fell 6 per cent after its chairman, Christopher Sporborg, said that despite the end of the Iraq war and the absence of any nasty shocks in the Budget, the difficult market conditions which prevailed at the start of the year had persisted. Weak consumer confidence was making homeowners cautious about moving house, he told the annual shareholders' meeting.

Countrywide's estate agency division contributed £40m of the group's £83m in pre-tax profits last year. The company accounts for about 10 per cent of the market and has 858 branches trading under brand names such as John D Wood, Faron Sutaria, Bairstow Eves, Mann & Co, Dixons and Bridgefords.

Harry Hill, Countrywide's managing director, said it had now embarked on a cost-cutting programme with the aim of saving £1m a month in its house-selling division which employs 4,500 of the group's 9,000-strong workforce. This would be achieved by not replacing staff when they left and trimming provincial advertising budgets.

Mr Hill said prices had fallen by 10 to 15 per cent and forecast that they would remain flat for the remainder of this year. The average selling price in the first quarter was £140,000.

Despite the slowdown in house sales, Mr Hill said Countrywide's surveying and valuation divisions had never been busier because of the amount of remortgaging going on. In the case of some mortgage lenders, up to a half of all valuations Countrywide was carrying out were for remortgaging purposes as homeowners took advantage of low interest rates to cash in some of their equity or raise new loans for house improvements.

Countrywide's conveyancing division also continued to undertake business at capacity levels but transactions were being completed more slowly because of longer chains and greater caution among buyers.