Questor: estate agents would love this Rightmove rival to triumph. Is it in with a chance?

houses with question marks

Home buyers love Rightmove: it’s the first place most of them go to when they search for a new property. Investors love it too after an 18-fold rise in its shares since its listing in 2006 (although they are unchanged since Questor joined the party in 2019). Estate agents are less keen on the company, however.

They say Rightmove’s dominance allows it to charge so much that, key though it is to bringing buyers through the door, they can barely afford it. Their feelings go deeper than a sense that Rightmove takes too big a slice of the pie.

“I’ve got no loyalty to Rightmove – it raised its charges during the pandemic, whereas Zoopla [its main rival] was more understanding,” one estate agent told Questor. “Agents won’t forgive Rightmove for this – you don’t forget how you’re treated when you are down.”

This sense of grievance, you would imagine, provides the perfect opportunity for OnTheMarket, the rival portal that started as a mutual owned by the estate agents themselves and even now, as a quoted company since 2018, has most of its shares in the hands of estate agents up and down the country.

In some respects it has made great progress.

At the time of last year’s annual report it had 13,364 advertisers (estate and letting agent branches and new home developments), compared with 19,197 for Rightmove. This suggests estate agents are keen to give it a try.

But other numbers paint a less promising picture.

While Rightmove’s website received a total of 2.1bn visits in the year to December last year, OnTheMarket’s equivalent figure was 237m for its last full year, to January last year – this year’s results are due on Tuesday. That vast gap in visits is reflected in the average monthly amount the portals make from each estate agent or developer: £778 for Rightmove against OnTheMarket’s £122.

The difference was even starker in the pre-pandemic figures a year earlier, when Rightmove made £1,088 a month compared with OnTheMarket’s £130.

It’s clear that Rightmove is a long way ahead. Can OnTheMarket close the gap?

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It will be quite a struggle. This is a market where dominance is self-reinforcing: homebuyers go to Rightmove or Zoopla because they know they will find a wide selection of properties; advertisers put their properties there because they know it is buyers’ first port of call.

A buyer may look at three portals, but if they have to choose one it will probably be Rightmove or Zoopla; the same applies when agents decide which portals to use.

“I once dropped one of the big portals, but my staff said we had to go back because sales dropped off a cliff,” said Jeremy Leaf, a long-established north London estate agent.

Against that we must consider agents’ aversion to Rightmove. If OnTheMarket exploits that goodwill to the full, delivers a flawless service and manages to build greater awareness of its existence among the home-buying public, is it in with a chance?

Perhaps, but those are big ifs.

“I’ve been a member from the start – I was attracted by the possibility of breaking the Rightmove/Zoopla duopoly,” Leaf said. “OnTheMarket started like a train, but ran out of puff. It just didn’t haven’t the energy, resources or infrastructure.

“Now it is a bit better, but the question is whether it can be sustained. It needs to keep up its spending on marketing and get established in the public’s mind.”

Questor is sceptical. In a booming market such as today’s it may be worth an agent using all three portals. In a quieter one you will probably want to reduce the roster to one or two – and obviously you’ll drop the ones that produce the least business.

Agents will continue to pay for OnTheMarket only if it reaches customers other portals don’t or if it brings in enough customers that other portals can be dropped. Neither seems particularly likely.

Agents may be desperate for OnTheMarket to succeed, but in the end they will go where their customers are. Questor can’t see Rightmove losing its dominance. We retain our hold rating on that stock, but will steer clear reluctantly of OnTheMarket.

Questor says: hold Rightmove, avoid OnTheMarket

Tickers: RMV, OTMP

Share prices at close: 613.6p, 97.5p

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