LSL share price tumbles following trading update

LSL one of the UK's largest estate agency groups issued a trading update today

What LSL said

Since the mini-budget presented in September 2022 there has been a marked slowdown in the UK housing market 

Residential sales fall-throughs have trended higher in the past few weeks, mainly from more recently agreed sales.

The challenging background means that there is a wider range of potential outcomes for the full year than previously expected.

Twindig Take

LSL was not pulling any punches in its trading update this morning. It has witnessed a slowdown in the UK housing market since the Truss/Kwarteng mini-budget in September.

Investors did not waste much time in delivering their verdict, at 09:00 the shares were down 35p or, unluckily 13%.

The trading update highlighted that the main impact, so far, of the mini-budget on the housing market, was to cause homebuyers to sit on their hands. LSL's comments focused on housing transaction volumes and pipelines rather than falling house prices.

Housing transactions take a long time to gestate, therefore LSL is likely to feel the impact of the mini-budget for some time, a slowing market in September and October will negatively impact sales volumes in the first quarter of 2023.

LSL's comments about 2023 were very cautious
"until we have greater clarity on the economic backdrop, we are cautious on the market outlook for 2023. A significant reduction in housing transactions would clearly have a material effect on our Estate Agency residential sales business and our direct-to-consumer financial services business."

and it was these forward-looking comments which spooked investors, in our view.