Rightmove has been described in Investors Chronicle as “probably the most impressive business I have ever looked at in over 20 years as an analyst and financial journalist”.
Writing in the magazine, Phil Oakley says: “Its ability to grow while achieving incredibly high profit margins and cash generation with very little capital investment has delivered sensational returns for its investors.”
He says that Rightmove has achieved growth “while delivering probably the best financial performance of any company listed on the London Stock Exchange”.
The article, under the title ‘Can anything stop the Rightmove juggernaut?’ also asks: “So far, Rightmove has been able to fend off the competition and thrive, but can it continue to do so?”
The article says that leaving Rightmove may have significant negative implications for agents.
“Rightmove has created a brand and service that have become synonymous with estate agency itself.
“To leave and go elsewhere is a risk that few estate agents have been prepared to take . . . This has given Rightmove immense pricing power.”
But, he asks, can Rightmove keep on increasing its prices?
“Trawl the internet, estate agency forums and trade publications, and you will find that Rightmove and its pricing is a hot topic”, says the article.
Agents are facing tough times, there is disquiet over the opaqueness of its pricing, and then there is the issue of geographical pricing.
So, how effective is the competition to Rightmove?
Oakley says that given the huge discrepancy in price, it begs the question as to why more agents don’t use Zoopla instead of Rightmove: “This may happen in the future but it is not happening now.”
OnTheMarket has not inflicted any damage on Rightmove and “may never be in a position to do so”.
This, suggests Oakley is because customers currently on free trials may need convincing that it is as good as, or different from, Rightmove or Zoopla.
Oakley also queries the “strange” decisions of OTM and Zoopla to list their lettings properties on Facebook Marketplace, casting some doubt as to whether this will bring the kind of coverage and leads that will unnerve Rightmove.
Oakley also – very briefly – cites Rummage4Property, which he says shows belief “that a bite can be taken out of Rightmove’s profits”.
If a competitor cannot halt Rightmove, Oakley suggests that a property market recession could do it.
There has been a stagnation in the number of advertisers, Oakley points out.
He ends by advising investors: “If you believe that the company can continue to dominate the property portal market and keep on increasing prices without losing customers, then there’s a case for arguing that the shares are not desperately expensive.
“Those who think that its customers may have been squeezed enough in a weakening UK housing market will stay well clear of the shares.”
* One agent who has left Rightmove is SA Properties, with a single office in Swansea. It says in a testimonial for OnTheMarket that it removed its properties in July when paying almost £1,600 per month but, it claims, receiving only ten leads per month.
The firm, which went on to join OTM in August, says it has not suffered at all: “There is a belief that an agent has to be on Rightmove but that’s not true. If someone is genuinely looking for a new home, they will find it without Rightmove.”