Is the Rightmove bubble about to burst?
In the last week, I have been contacted by a number of agents complaining that their annual Rightmove costs are set to rise well above the rocketing UK inflation rate. I asked all of them if they felt that they were getting value for money. That got me to thinking about the current state of Rightmove.
Ten years ago, the share price of Rightmove was 154p. Today it is 641p, which though a fall from 795p a share last December is still a great headline number. On the surface Rightmove is still in rude health, defying all the problems that large, listed companies seem to have had during recent times.
It is based upon a SaaS model, software as a service, which means that users pay a monthly fee to utilise the Rightmove portal and benefit from any other services they provide, usually at a discounted rate.
Since floating on the Stock exchange in 2006, the market cap or value of the business has grown to over £5 billion, making it an investor’s darling. Apart from the pandemic blip, when operating profits were down to £135 million from the previous £213M million the year before, this juggernaut seems unstoppable.
But – and there always is a but – are we now seeing a change in consumer behaviour that may have repercussions for Rightmove? Could there be a threat that will erode the eye-watering profits that stubbornly increase year on year?
Rightmove had its genesis in the late 1990s when the internet and all things digital were coming into being. At that time, estate agents were still using printed newspaper advertising to show their inventory, and the property consumer was still reading physically printed publications en masse.
Rightmove launched in 2000, just a few years before the power of cloud computing came through and heralded the rise of Google and Amazon in their earliest incarnations. Its original sponsors were, among others, Countrywide Plc, Connells and Halifax, so its DNA was originally agent-centric.
For a number of years thereafter, estate agents in the UK listed their inventory on Rightmove while at the same time listing in newspapers and printed publications, splitting their marketing cost. As time passed and the world turned digital, most agents came away from print and put the totality of their spend into Rightmove.
Seven years after Rightmove was founded, Simon Kain and Alex Chesterman launched Zoopla, but Rightmove had many years of first-mover advantage, and the brand was already embedded with vendors, landlords, buyers and renters.
Fast forward to 2022, there are now four main property portals in the UK. OnTheMarket and Boomin joined the fray, in addition to Zoopla and Rightmove. Rightmove turned over £301 million last year and still sits as the undisputed heavyweight titleholder. Its core business model is to increase the fees paid by agents for its digital service on an annual basis, highlighting them to the swathes of people who access its site as a fair deal for all.
What is now happening is that the property consumer, all those people who log on to Rightmove, are not the same audience that logged on five years ago, let alone ten.
The property audience of today, and what will likely be the property audience of 2025 and 2030, are digital natives. They want nanosecond service, an Amazon-like user experience and a digital journey around property that Rightmove does not provide. Their lives are conducted on smartphones, their actions governed by algorithms and automation.
Look at it another way, through the prism of social media. Facebook is for old people now. 67% of the world’s population under 35 years of age use other platforms to “find their happy.” And whilst Rightmove was unbelievably futuristic in 2000, it has become a behemoth akin to Blockbuster, failing to evolve. The portal is seen by the younger generation as something that their parents use – it has become Facebook.
Many pundits say that Rightmove’s Achilles heel is, ironically, its agents. Eventually, they will leave Rightmove as the pricing is too high. But if the Rightmove audience disengages because there are better alternatives to supply better property solutions, then this fickle, hard-to-please and ever-demanding audience may well be the big existential problem that Rightmove needs to address sooner rather than later.
Facebook has attempted a reboot by rebranding groupwide to Meta, but it had already lost its core audience ten years before. It was just too busy counting the profits to realise.
Will Rightmove do the same?
Growing support for campaign to make renting with a pet easier
A couple of months ago, I had a meeting with Jen Berezai, the co-founder of AdvoCATS. I wanted to fully understand what she was looking to achieve. By the end of the meeting, so obvious was her genuine drive to make things happen that I said we would place one of my companies behind the project as it made a lot of sense.
Having been a tenant, a landlord since 1989 and an agent for over thirty years, I could see the argument from all sides regarding tenants and pets. The rights of the landlord, the tenant and the letting agent if they were in the mix, balanced against the ‘risks’ and reservations of all stakeholders, and the rewards.
So for those who do not know, AdvoCATS is a voluntary non-profit organisation, set up in 2018 to offer a free support and advice service to both landlords and tenants and assist pet owners who experience difficulty finding rental accommodation.
Their mission statement: Campaign Action Teach Support covers their grassroots work and, more recently, the Heads for Tails! campaign to make renting with pets easier and fairer for all parties
The east Midlands-based voluntary organisation AdvoCATS has now announced the addition of several organisations that are lending their support to the charity’s Heads for Tails! campaign for a simple change in the law to make renting with pets easier.
Newly committed to the campaign are International Cat Care, the pioneering cat welfare charity established in 1958, and the Pet Food Manufacturers Association (PFMA), the leading trade body for the UK pet food industry. Both are long-established organisations with a vested interest in human and animal welfare.
The campaign, originally borne out of MP Andrew Rosindell’s 2020 private members bill (dubbed Jasmine’s Law), has already secured endorsement from over 30 organisations including the National Residential Landlords Association (NRLA), National Office for Animal Health (NOAH), the Property Redress Scheme and Propertymark.
As well as 40+ MPs/Peers, when AdvoCATS and Andrew met with Eddie Hughes MP, the Parliamentary Under-Secretary for Rough Sleeping and Housing, last December.
With another meeting anticipated in late Spring, more industry heavyweights are joining the call to amend the Tenant Fees Act 2019, to allow a landlord to either request a financially capped pet deposit or stipulate pet damage insurance must be held by any tenant wanting to keep a pet or pets.
Dr Sarah Ellis (BSc Hons, PG Dip, PhD), Head of Cat Advocacy at International Cat Care remarked: “In a world where renting is commonplace and where there are so many pet cats relinquished and/or needing homes, making renting with pets easier is a critical contribution to sustaining positive wellbeing for people and pet cats.”
Commented Nicole Paley, Deputy Chief Executive of the PFMA: “We are delighted to add our support to the important work of AdvoCATS. Our pets have such a positive impact on our lives from reducing stress and anxiety to providing much valued companionship. It is vital we address how we can support owners renting with pets.”
AdvoCATS co-founder Jen Berezai welcomed the support, and said: “To have well-respected industry names back our campaign is fantastic. We are in discussion with a number of other organisations which have expressed interest in the campaign and, in fact, have just recruited Proptech-PR, CEO Andrew Stanton. As well as ProtectaPet, all of which strengthens our case for the government to adopt the Heads for Tails! Proposals, which will open up pet ownership for thousands – maybe even hundreds of thousands – of tenants.”
Andrew Stanton is the founder of Proptech-PR, a consultancy for Founders of Proptechs looking to grow and exit, using his influence from decades of industry experience. Separately he is a consultant to some of the biggest names in global real estate, advising on sales and acquisitions, market positioning, and operations. He is also the founder of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.