Coronavirus costs Rightmove up to £95m despite 10% leap in sales

Tom Belger
Finance and policy reporter
House prices have not fallen as much as many expected so far during the coronavirus crisis, with sales jumping after lockdown restrictions eased. (Andrew Matthews/PA Images via Getty Images)

The coronavirus crisis could cost Rightmove (RMV.L) up to £95m ($118m) in lost revenue from discounts offered to struggling estate agents and developers.

The company’s shares slid more than 3% on Tuesday, as it announced discounts for estate agents listing on the leading property portal would be extended to August and September.

It comes in spite of the reopening of the property market in England in May and easing of lockdown restrictions in Scotland and Wales this month.

Rightmove highlighted “strong” buyer demand since the government gave the green light for non-essential home moves in England on 13 May.

It said agreed sale levels were up 10% on a year ago in England, while the number of new properties added to the site in the past week is also up more than 10% year-on-year. It has seen its 10 busiest ever days on its site in the past six weeks, and reported last week estate agents were “not ready for the sudden rush of buyers.”

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But it said in a trading update: “Despite the positive consumer reaction to the re-opening of the housing market, it takes three months on average for housing transactions to complete which impacts the cash flows of our agents. It will also take time for agents to build a pipeline of vendors and new sales instructions.

The property portal said this lay behind its decision to offer estate agents a 60% discount in August and 40% discount in September. Scottish and Welsh agents received a larger 75% August discount and 60% September discount, reflecting the later easing of lockdown rules.

Rightmove said the measures would cost it £17-20m, on top of the £65-75m hit expected for the 75% discount offered across the UK between April and July.

The trading update also saw Rightmove warn over “longer-term uncertainty” around the impact of the pandemic on the economy. It noted that “some” of the recent jump in activity simply reflected transactions paused during the lockdown.

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The pandemic has had a relatively limited impact on house and flat prices so far, but they are widely expected to slump eventually amid the steepest economic downturn in decades. Estate agents say would-be buyers have been left disappointed not to secure bigger bargains in recent months, with Rightmove reporting asking prices £6,000 higher in June than in March.

Bank of England analysis in May suggested UK property prices may drop 16% this year, as the economic fallout grows, job losses mount and government support is tapered off. Temporary crisis measures may be sustaining demand and limiting forced sales, with one in six mortgages given a payment holiday and almost one in three workers furloughed on state-subsidised pay.

Zoopla’s research director Richard Donnell said in early June the spike in demand since restrictions were eased may prove “short-lived,” with Britain’s economic troubles likely to “feed through” into market sentiment later this year.