OnTheMarket share price goes through the roof, whilst Rightmove share price drops
OnTheMarket has seen their share price increase by over 50% due to the likely takeover by CoStar Group, at the same time Rightmove the darling of the London Stock Exchange has seen a 14% dip in its share price. Out of nowhere, all of a sudden it would appear that the c-suite of Rightmove will need to react to this situation, as clearly market sentiment shows that many see OnTheMarket as a plausible contender for the top spot.
Having talked to numerous agents, some small and others much larger, the clear thing that keeps coming up is allegedly how badly Rightmove treats some of its clients. This perceived indifference has definitely caused a schism, which last came to surface in 2020 when the Covid epidemic was in full swing.
In a very fickle marketplace where brand is everything, might we see a ‘Say No to Rightmove’ and ‘Say Yes to OnTheMarket’ trend emerging? Especially as the huge gulf between what each portal expects their agent clients to pay. Much will depend on how many new users OTM can drive to their site, and what value OTM can deliver to agents who are being knocked sideways by a stagnant residential housing market.
In my day job working in Property technology, I have been writing for years that Rightmove may well be the incumbent, but one day an agile business will creep up on them, offer a different business model to just being a digital classified advertising site.
Well here we are, Rightmove may well have had a 23 year free ride, but as we are seeing with numerous businesses, if you could not innovate you wither. And having a 70% profit margin, as well as increasing revenue year by year can mean only one thing, you are probably charging the end client far too much because in reality you possibly hold a monopoly type position in a marketplace.
In my opinion as an analyst, the functionality of Rightmove if you are looking to purchase or rent is extremely basic, and it may be a case that Rightmove feels that the tech savvy generation of today like to be able to search for property like mum and dad did in the 1990’s, but they would be wrong, I mean why can you not just ‘talk’ to the portal about what you want, and it matches your needs?
Well that would take investment, development and time and eat into that profit share, well maybe CoStar will force them to modernise their offering, reduce their fees as they respond to a large player looking to take market share.
And of course we have Zoopla an American owned company, where now will it fit into the UK property portal ecosystem, it has cosily been at that number two spot for a while, the brilliance of Alex Chesterman left some time ago, what now will it do to stave off spending power of the CoStar group.
Obviously, we are not there yet and it is not a done deal, but all the indicators are in place that very soon it will be, I wonder then what will be happening to the rapidly dipping Rightmove share price, watch this space.
Unusually flat property market, despite stable supply
Landmark’s newly released Q3 Residential Property Trends report offers a comprehensive analysis of property data from the third quarter of the year, examining the entire residential property transaction chain – making it the most extensive cross-market analysis of the property sector in England and Wales.
Despite indications that inflation and interest rates may be heading in a more positive direction, the data for Q3 shows a subdued market as the usual post-summer uplift failed to materialise.Continued market uncertainty and affordability issues had a continued impact on Sold Subject to Contract (SSTC) levels in the last quarter, with September seeing the biggest negative variation to the pre-COVID benchmark of 2019 so far this year at 49% down vs 2019 levels.
Similarly, this muted cross-market picture can be seen at valuation stage, with valuation volumes failing to improve (38% down on 2019 levels in September) – further demonstrating the affordability constraints home-movers are facing. However, despite the overall picture of a flatter market, supply remains relatively healthy as we head into Q4. Listings were 3% higher than 2019 benchmark levels in September.
Simon Brown, CEO of Landmark Information Group, said: “Amidst the ongoing challenges of the economic landscape, our data paints a picture of an unusually muted yet stable market. The post-summer bounce back we would usually expect to provide a boost going into Q4 hasn’t yet happened, leaving the market in a remarkably flat position.
While this stabilisation means an end to the volatility of previous quarters, it also leaves us in unchartered waters, with few in the industry remembering such a prolonged period of stagnation. However, we are operating in a resilient market, meaning growth will eventually return. For now, we wait to see what the external landscape brings in Q4.”
Key findings from the report
Cross market activity
- Listing volumes in Q3 ‘23 have remained relatively strong with both August reporting a 2% increase and September showing a 3% increase on the same months in ‘19.
- SSTC volumes in Q3 ’23 tracked 36% below Q3‘19.
- Search order volumes in Q3 ’23 recovered slightly over the quarter but were still 36% down on Q3 ‘19 volumes in September.
- Completions levels in Q3 ‘23 were 4% higher vs Q2 ‘23 but 35% down compared to Q3 ‘19.
- Listing levels crept over the 2019 benchmark in both August and September, with August reporting a 2% increase and September a 3% uplift on the same period in ‘19.
- Supply is consistent with Q2 ‘23 levels, 1% up over the last 6 months.
- SSTC volumes in Q3 ’23 tracked 36% below levels seen in Q3‘19.
- Although SSTC volumes rose by 6% in August ‘23 on the month prior, this was a reflection of an unusual drop in SSTC levels seen during August ‘19.
Property Search to SSTC
- Supply is in a relatively positive position with levels 3% lower in July ’23 vs ’19 and 3% higher in Sept ’23 vs ’19.
- However, demand is struggling with volumes 38% lower in July ’23 vs ‘19 and 39% lower in Sept ’23 vs ‘19.
Mortgage valuations to approvals
- Higher borrowing costs have cooled demand, resulting in a decline in both mortgage volumes and approvals this quarter.
Andrew Stanton is the founder and CEO 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 and editor of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.