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Investment bank questions Rightmove’s rose-tinted agent figures

Berenberg says the 3.5% slide in agent branches listing with Rightmove may accelerate soon as the reality of Covid changes kick-in for the industry.

Nigel Lewis

portal

Rightmove’s share price slid yesterday after a leading investment bank issued a warning about the portal’s future performance and questioned whether its 3.5% reduction in agent customers published within its most recent trading update will soon accelerate.

The portal’s share price dropped 3% during early trading after German analyst Berenberg pointed to choppy waters ahead for the portal, despite its share price rebounding significantly since the housing market re-opened in June and almost immediately began booming.

Berenberg’s note says there are “material risks to the financial health of estate agents” when the UK furlough schemes end in October and the stamp duty holiday ends at the end of March next year.

“These risks add to an industry already struggling pre-COVID-19 – with numerous branch closures – and will add further pressure on either Rightmove’s pricing potential and/or agency customer numbers.”

Underlying situation

The German bank’s analysts claim Rightmove’s branch figures, which earlier this month revealed a reduction from 16,347 to 15,767, are not a fair reflection of the underlying situation.

This is because many agent staff have yet to return to work from the furlough scheme; some branches remain closed; government business support schemes remain in place and many agents have yet to begin paying full fees for Rightmove’s service, as well as problems caused by tighter mortgage lending criteria.

“Near-term discounts are papering over the cracks, in our view, and both cyclical and structural headwinds will resurface sooner rather than later,” the note says.

Based on all this, Berenberg has advised those holding Rightmove shares to sell.

August 19, 2020

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