Rightmove: wrong footed | Financial Times

The worst recession in 300 years was little more than a bump in the road for online property portal Rightmove. Total revenues fell 29 per cent to £206m last year, results on Friday revealed. The declines did little to dent the group’s formidable profitability; operating margins of 66 per cent fell just 8 percentage points from 2019. That strength reflects near-monopoly status. 

Rightmove has become an established part of the UK housing market. Also well-entrenched is British politicians’ habit of throwing handouts at the sector during tough economic times. A stamp duty holiday unveiled by the chancellor last year and widely expected to be extended at next week’s Budget is no different. A relatively benign market is a relief to shareholders but a nagging erosion of its estate agent membership numbers remains worthy of concern.

Agents numbered 15,922 at the end of last year, 425 fewer than in 2019. That was an improvement on the decline of 580 recorded at the half-year mark in June from when the market picked up. Fewer agents and renewed lockdowns in 2021 have hit listings on the site. At 363,000 (excluding homes under offer) in January, these are the lowest since 2015, according to UBS. 

Without a sustained recovery in transaction volumes and listings this year, a full valuation for the shares looks exposed. The share price recovered well last year. Rishi Sunak’s tax breaks stimulated the market to drive house price growth to double the average rate experienced in the past decade. But the shares, trading at 30 times two-year forward earnings, are at the top of their historical range.

First-time buyers have been hit particularly hard by the downturn and especially by a lack of availability of high loan-to-value mortgages. With the government’s Help to Buy scheme set to expire in 2023, Mr Sunak has scope to unveil a new building project. If that emerges from the Budget next week, it would provide a temporary distraction from concerns about falling agent numbers.

Our popular newsletter for premium subscribers Best of Lex is published twice weekly. Please sign up here