COUNTRYWIDE, Britain’s biggest estate agency, yesterday admitted that the housing market was cooling and sent its shares plunging by 12 per cent.

Countrywide, owner of the Bairstow Eves, John D Wood and Mann & Co chains, said it had arranged 25 per cent fewer sales in July than in the same month last year as interest rate rises forced buyers to act “more circumspectly”.

The agency also said that the London lettings market was “showing signs of saturation”, adding to fears of a potential sell-off by buy-to-let landlords.

Christopher Sporborg, the Countrywide chairman, admitted that “successive interest increases have caused the market to cool in recent weeks”. However, he believed it would be “premature” to say that the trend would continue, insisting that seasonal factors were still playing a role in the recent slowdown.

Countrywide’s assessment of the market adds weight to Wednesday’s comment by Mervyn King, Governor of the Bank of England, that “house price inflation may now be beginning to ease”. The Bank’s Monetary Policy Committee also said that house prices had peaked when it put up interest rates to 4.75 per cent last week, the fifth rise of a quarter of a percentage point since November.

Mr Sporborg said that a clearer picture of the housing market would emerge in the autumn. In the meantime, the company, which is hugely dependent on housing market volumes, would rein in its business costs “in anticipation of less buoyant trading conditions”.

Countrywide’s cautious outlook sent analysts scrambling to downgrade their full-year forecasts for the estate agency, even as the company revealed a 38 per cent surge in its first-half profits to £30.8 million.

Justin Bates, analyst with Numis, downgraded his earnings-per-share forecasts by 15 per cent for this year and by 7 per cent for next year.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive