By Aby Jose Koilparambil
(Reuters) -Foxtons, London's largest estate agency, said on Thursday that the vast majority of its clients who are renting are keen to get on the property ladder as skyrocketing rents outweigh mortgage cost concerns.
Foxtons (LON:FOXT) CEO Guy Gittins told Reuters that there is an extreme imbalance between supply and demand in the rental market, driving up prices. The number of lettings applicants registering with the company has surged 172% currently compared to pre-pandemic 2019.
"Even if they are paying a 6% or 7% mortgage rate, if they have paid the (home purchase) deposit and bought a normal one- or two-bed apartment in most of the areas outside of prime central London, their monthly repayments to mortgages would actually be lower than what they would be paying in rent," Gittins said.
Property website Rightmove earlier this month said average advertised rent for new tenancies in London grew 2.6% quarter-on-quarter in the three months to June and was 13.7% more than a year ago.
Foxtons said it expects the wider home sales market to remain challenging as high mortgage costs and tight credit conditions make home purchases less affordable.
The company posted a 10% jump in half-year adjusted operating profit at 6.8 million pounds ($8.8 million), mainly on strength of its prime lettings business.
The group's revenue from continuing operations grew 9% to about 71 million pounds, while revenue from the lettings division jumped 26%.
Shares in the company rose more than 5% to an over one-month high of 39.90 pence.
($1 = 0.7720 pounds)