London-based estate agency, Foxtons Group plc, has reported a third consecutive quarter of market outperformance in its Q3 2023 trading update. Despite a 23% decrease in sales market volumes, the company's revenue for the nine months ended 30 September 2023 increased by 5% to £114.8m compared to the same period in 2022. Q3 revenue remained flat at £43.9m, with revenue from lettings up 8% to £31.6m and revenue from sales down 17% to £9.9m. Financial services revenue also decreased by 13% to £2.4m in Q3. The company's CEO, Guy Gittins, attributed the market outperformance to operational upgrades and investments in fee earners, training, data, and brand. He expressed confidence in the company's strategic priorities and medium-term profit ambitions.
In the lettings segment, Q3 revenue increased by 8% to £31.6m, driven by organic growth, incremental revenue from an acquisition, and growth in interest on rental deposits. The rate of rental price growth moderated compared to the previous two quarters due to normalized supply and demand dynamics. In the sales segment, revenue decreased by 17% to £9.9m in Q3, outperforming the market's 23% reduction in exchange volumes. Market share gains and operational improvements led to a 6% increase in Q3 viewings compared to the previous year. Despite a 5% decline in property values across the market, Foxtons maintained a flat average exchange price by gaining market share in higher-value properties. Financial services revenue decreased by 13% to £2.4m in Q3, reflecting lower new purchase mortgage volumes and an increased proportion of lower-value product transfer mortgages.
Looking ahead, Foxtons expects robust performance in the lettings segment in Q4, although rental increases are expected to moderate. The supply of available rental properties is expected to improve, providing an opportunity to increase market share. In the sales segment, Q4 revenue is expected to be lower than the previous year, but market share gains should reduce the adverse variance compared to previous quarters. With mortgage rates stabilizing, Q4 buyer demand is expected to outpace the previous year, driving year-on-year revenue growth in Q1 2024. The company forecasts a small net cash position at the end of 2023, assuming no further acquisitions. Overall, full-year earnings are expected to be in line with consensus.