Rental growth to decline this year warns muted Winkworth

Winkworth’s first trading statement of 2024 reveals that it saw a five per cent rise in rental revenues in 2023 - but a 19 per cent collapse in completed sales.

The statement says: “The shortage of rental property in 2023 and consequent rise in prices translated into an increase in our network revenues of around five per cent, offsetting the slower sales completions. We believe that the rise of accidental landlords, postponing their sales due to price uncertainty and switching to the lettings market, combined with tenants hitting affordability ceilings, will lead to lower growth in 2024 and slowing rent increases.

“[Rental] price increases from previous years, however, will continue to feed through as properties come up for re-letting, underpinning growth in the sector.”

Reflecting on the past year’s sales activities, the statement says that the rise in interest rates took its toll on the UK property market. 

“As we anticipated, the gloomiest forecasts for prices were not met and prices ended the year only some five per cent below their peak in the summer of 2022. Hesitancy on behalf of buyers, however, along with legal delays in conveyancing, led to a downturn in transactions. Winkworth’s network completed sales for the year fell by some 19 per cent. 

“A substantial number of already agreed and contracted sales will now be reported in 2024 and, with activity in Q4 2023 showing a year-on-year improvement, we have entered the New Year with a stronger pipeline than at the end of 2022.”

Winkworth’s full year pre-tax profits are expected to be in line with the current market forecast of £2.1m - down from £2.47m a year ago - and net cash at year end, following increased investment in new offices in 2023, to be at least £4.4m, again down from the £5.25m a year ago. 

Chief executive Dominic Agace says: “With inflation seemingly under control and interest rates peaking, we enter 2024 feeling more optimistic than this time last year. Winkworth has a well-balanced revenue flow between sales and lettings and improved conditions in the former would counterbalance any slowing in the latter. After opening four new offices in 2023, we are in negotiations for some eight additions in 2024, in line with our long-term target.”