M Winkworth PLC shares rose on Friday, despite saying network completed sales fell strongly in 2023, as it blamed the effect of rising interest rates in the UK.

Shares in M Winkworth were up 4.3% to 164.30 pence each in London on Wednesday early afternoon, despite the London-based estate agent saying network completed sales fell by 19% compared to 2022.

‘The rise in interest rates, which began after the mini budget in [the fourth quarter of] 2022 and was sustained through 2023 by the fight against inflation, 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 5% 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,’ the company said.

However, shares likely rose on account of M Winkworth’s pipeline.

It noted a ‘substantial’ number of already agreed and contracted sales will now be reported in 2024.

It also said, with activity in the fourth quarter of 2023 showing a year-on-year improvement, it has started 2024 with a stronger pipeline compared to the end of 2022.

M Winkworth said network revenues rose by around 5%, due to the shortage of rental properties in 2023 and rise in prices, offsetting 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. Price increases from previous years, however, will continue to feed through as properties come up for re-letting, underpinning growth in the sector,’ the company said.

M Winkworth also declared a fourth quarter dividend of 3.0 pence per share, ticking up from 2.9p a year earlier. This takes the annual payout to 11.7p, rising from 11.0p a year earlier.

M Winkworth expects 2023 pretax profit to be in line with the current market forecast of £2.1 million. In 2022, it posted £2.5 million in profit.

It also expects net cash to be at least £4.4 million on December 31, falling from £5.3 million a year earlier due to increased investment in new offices in 2023.

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,‘ said Chief Executive Officer Dominic Agace.

‘After opening four new offices in 2023, we are in negotiations for some eight additions in 2024, in line with our long-term target.’

M Winkworth expects to announce its 2023 results on or around April 17.

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