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Upmarket estate agent and surveyor Savills shocked investors with its second profit warning in two months today, reflecting the impact of tumbling house prices and the credit crunch on Britain's once red-hot property market.
The international property company, which often relies on City bonuses to boost sales, warned today that profit for this year would be well below analysts' expectations. Its shares plunged almost 13% or 31.5p in early trading, to 218.25p, as the group also said it would "consider its dividend policy" in light of late 2008 and early 2009 trading.
Just six weeks ago, the company reported that it was trading well in difficult markets.
Today, however, Savills said it has seen a sharp decline in business in September and October, especially in Europe and the US, as the financial crisis has deterred many potential housebuyers.
"In recent weeks investor confidence has been severely impacted by the recent turmoil in financial markets, which has led to a sharp reduction in transaction volumes," it said.
December is traditionally an important trading month for estate agents but the expected seasonal pick-up in activity had not been seen, the company said.
The trading update also revealed that the firm's property advisory arm has also been hit badly. The financial services arm, which predominately involves mortgage broking in the UK, fared poorly as the availability of credit on the market deteriorated further.
"A return to higher levels of transactional activity will depend on how quickly confidence returns to financial markets," Savills said.
The company is due to release its full year results next March.
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