Market commentary

Rightmove might have defied a weak UK property market to be on course for an increase in profit and revenue, but there are some warning signs of a potential ceiling on revenue growth.

Perhaps the biggest red flag is Rightmove’s trim of the top end of revenue guidance for this year, from 8% to 7%, along with expectations for average advertiser spend as fewer new developments are being listed on its site. 

Rightmove’s results come in a week where fresh interest rate hikes likely herald further mortgage affordability issues, and the UK’s largest housebuilder, Barratt Redrow, warned its property completions sagged and underlying reservations softened.

For all the grey clouds over the market, Rightmove’s platform is the glue holding its performance together, likely aided by strong engagement in myriad new AI features. Its retention of advertisers during the period was particularly impressive, hitting 92%, its second highest level in the past decade. 

Meanwhile, cost disciplines helped the business’s outlook for underlying earnings-per-share growth head in the other direction, rising from 5% to at least 7%.

But while Rightmove might still have a vice-like grip on residential property advertising, that’s turning heads for the wrong reasons.

That’s because Rightmove has a £1.5bn legal claim hanging over it as agents claim the company has exploited its dominant position to overcharge advertisers. The Competition Appeal Tribunal has reserved judgment following hearings this week on how and whether the complaint can head to trial. 

Rightmove strongly denies the allegations, and the case may end up a non-starter, but it does highlight the potential risk of squeezing agents too hard in pursuit of growth in a weak market.

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