Estate agent group Savills has raked in more than £1 billion in revenue this year despite residential sales being dragged down by rising interest rates and fewer houses coming onto the market.
The company – which has offices in more than 70 countries – reported an 11% increase in its group revenue in the first half of the year, bringing in £1.03 billion against £932.6 million in the same period last year.
Revenue from UK residential sales dipped by 8% to £95.8 million as demand for new homes far outpaced supply and higher interest rates pushed up the cost of mortgages for house buyers.
The Bank of England hiked interest rates to 1.75% in August from 1.25%, the highest single rate rise since 1995, making it more expensive to borrow and lifting mortgage repayments for homeowners who are not tied to fixed-rate deals.
The rising cost of debt has begun to drag down house price growth after asking prices soared following the pandemic, Savills said.
Savills saw its pre-tax underlying profits fall by 10% year-on-year, at £59.2 million compared to £66.1 million.
Rising staff costs and the return to higher spending on marketing, travel and events after abnormally low levels in 2021 explain the group’s margins narrowing this year, it said.
Chief executive Mark Ridley said: “With inflation driving interest rates up globally, a new experience for many market participants, real estate markets began to adjust in the second quarter.
“We expect that process to continue through the second half of the year.”
Mr Ridley warned that rising interest rates will risk a short-term reduction in real estate activity as investors are deterred by higher debt costs.
But the group said its financial outlook for the rest of the year remains the same, despite the tough political and economic environment.
Shares in Savills slid by more than 7% on Thursday as investors reacted to the half-year results.