Rightmove’s shares fall amid concerns about UK property market
The share drop comes despite a solid set of sales figures.
Rightmove has become the biggest faller on the FTSE 100 amid fears over the UK’s property market.
Revenues at the property portal grew 10% for the six months ended June 30, rising from £119.5 million to £131.1 million year-on-year, and operating profit was up 12% to £98.2 million.
However, analysts cautioned that with estate agents under pressure, Rightmove’s future growth prospects might be limited.
Surveyors warned earlier this year that the housing market was seeing a decline in demand from buyers, and recent figures from HM Revenue & Customs showed residential transactions fell by 5.7% year-on-year in June.
Half-year results at online property portal Rightmove are a good reminder that it can still make very good money even when the housing market starts to weaken Russ Mould, investment director at AJ Bell
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said that estate agents “aren’t having a great time at the moment”, with the UK’s largest group, Countrywide, announcing a halving of its profits last year.
“More concerning for Rightmove will be recent moves to shut branches – since Rightmove charges on a per office basis,” he said.
“It’s all very well arguing that estate agents have no choice but to pay, but if conditions don’t improve some will find they still can’t.”
There is also pressure for Rightmove to start offering new services as a route to grow the business.
Liberum analysts said that Rightmove would need to move into offering new services to boost its sales to the agents that advertise on the site, but that this would be difficult in a “muted market”.
Russ Mould, investment director at AJ Bell, said: “Half-year results at online property portal Rightmove are a good reminder that it can still make very good money even when the housing market starts to weaken.
“However, the bigger question is for how long it can keep growing earnings at such a fast pace.
“Its competitors, OnTheMarket and Zoopla, are getting stronger, so Rightmove will have to think up new ways to engage with its clients and extract more money from them.”
Shares in Rightmove fell 1.7% or 90p to 5,002p.