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The property market is booming, according to February’s Nationwide’s House Price Index. Annual house price growth rebounded to 6.9% from 6.4% in January and with prices up 0.7% month-on-month, that has more than erased the small decline seen in January. So much so that with the average property now valued at £231,061; it’s the highest amount on record.

So, it should be good news from London-centric Foxtons Group (FOXT) when it posts its 2020 full-year figures on Wednesday. Or should it?

Robert Gardner, Nationwide's chief economist, seemed unsure about the stability of the February house price surge. Describing it as a “surprise”, he put it down to the pandemic and possibly changing working patterns having prompted more people to look for something else in a property, than they would previously have.

Nationwide’s figures are based on data at the mortgage approval stage, so with the stamp duty holiday at the point this data was compiled due to finish at the end of March - and therefore not leaving anywhere near enough time for the typical property sale to complete - it does seem odd that the imminent end of the stamp duty holiday was having little negative impact on sales. Since then, of course, we know the stamp duty holiday has been extended to the end of June, so anyone forging ahead and hoping for a stamp duty extension will be quids in now.

As he said: “Many peoples’ housing needs have changed as a direct result of the pandemic, with many opting to move to less densely populated locations or property types, despite the sharp economic slowdown and the uncertain outlook.

The big question for Foxtons has to be whether that desire for “less densely populated” areas leaves London, it’s main focus, distinctly out-of-favour with property hunters, who don’t want to live cheek by jowl any more, despite the pull of trendy cafes and delis right on their doorstep. Plus, if - and it is a big if - flexible and home-working becomes more the norm, will the capital still attract workers in quite the same numbers?

It really depends on who you get your info from and the precise period you are looking at. According to Rightmove, last year most property sales in London involved flats which sold for on average £547,491. Terraced properties sold for an average price of £742,671, while semi-detached properties fetched £699,107. It says that during the last year, sold prices in London were 6% up on the previous year and 8% up on 2018 when the average house price was £621,760.

But the average price of a house in London dropped from a record high of £514,000 in November to £496,000 in December, according to the Office for National Statistics (ONS). In its December 2020 index, ONS data revealed that the lowest annual growth across the country was in the capital, where average prices increased by 3.5% over the year to December 2020, but were down from 7% in November 2020.

Although it did say that this slowing in London’s annual growth is “partly a base effect”, explaining that: “London saw average house prices decrease between November and December 2020, while this time last year they increased by £10,000. London’s average house prices remain the most expensive of any region in the UK at an average of £496,000 in December 2020.”

In December Foxtons would appear to have bucked the downward trend noted by the ONS anyway. The estate agency group reported an 11% increase in sales revenue in October and November, to £5.4 million.

Overall, group revenues though, it said, were 15% lower, year-on-year, at £83.6 million in the first 11 months. However, you only have to take a quick scan through its top-end properties, with multi-million pound price tags, to see it also doesn’t need to shift too many to make up the difference.

And it said it expects to make profits of up to £1.5 million this year, twice as much as it lost in 2019, which was the year that it reported its first annual year since it came onto the stock market in 2013.

Wednesday’s results should shed some light on Foxtons own outlook. But it has been out snapping up property itself. Just days ago it announced the £14 million acquisition of rival agency Douglas & Gordon, will see it bolstering its London lettings business.

All part of its strategy to “acquire high quality businesses with strong lettings books”, Douglas & Gordon, which will retain its brand name, has a large lettings business, with 65% of total revenue generated from 2,900 tenancies. The deal will see Foxtons take ownership of the business, including all the company’s 200 strong team and operations, along with its 19 branches.

And Foxtons is spending up to £3 million on a share buyback in another sign that business is looking better and confidence is building - at least within Foxtons itself.

Having gone cap in hand to investors last year with a £22 million fundraiser and a warning that revenues could collapse as much as 78%, it has now revealed plans to buy back up to £3 million of shares.

More on Foxtons

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