City analysts Exane BNP Paribas yesterday sent out a note based on Eye’s report of the Agents’ Mutual deal with Scottish website Citylets.
The note said: “The estate agency trade press is reporting that Agents’ Mutual have announced their first exception to their only ‘one other portal rule’. In Scotland, lettings agents who become Agents’ Mutual members will be able to list on Citylets in addition to Agents’ Mutual, and either Rightmove or Zoopla.
“As a reminder, Agents’ Mutual is a new agent owned portal launching in Q1 15, aiming to challenge the incumbent portals Rightmove and Zoopla in the context of estate agent dissatisfaction with sustained price rises.
“While this is only a small fraction of the UK market (ie Scotland and lettings only), and Scotland has a unique property portal heritage, it is noteworthy that Agents’ Mutual feels the need to amend its ‘one other portal’ already prior to launch.
“We note that Agents’ Mutual argues that Citylets is a ‘non-competing portal’.
“We see this development as a positive for the incumbent portals and raises questions over the enforceability of Agents’ Mutual’s ‘one other portal rule’ – one of the key challenges for Agents’ Mutual in our view.
“Furthermore, we understand from agent contacts that a lack of consultation by Agents’ Mutual with Gold members over the changes may raise internal concerns.”
Paribas yesterday reiterated an “outperform” rating on Rightmove, with a more cautious stance on Zoopla.
The firm also reiterated its view that Zoopla is more exposed to the forthcoming launch of OnTheMarket.
In a separate briefing note to investors yesterday, Paribas said that the latest property transaction figures released by HMRC (see separate story) showed growth continuing to decelerate.
However, it added: “We see current transaction levels as supportive for estate agency revenue growth and profitability, the key client base for Rightmove and Zoopla.”
Although HMRC said transaction levels were up 20% on the year to date compared with 2013, they were up only 5% year on year in September.
Paribas said the slowdown in growth partly reflected the Mortgage Market Review.
It said: “As a reminder, property transactions are relevant to property portals as they are a key driver of estate agent revenues. Estate agent subscriptions represent 80% of Rightmove and Zoopla revenue.
“We see current transaction levels as supportive of continued healthy estate agency underlying revenue growth and profitability.
“We continue to expect transaction growth though the rest of 2014.
“Furthermore, if we assume a consistent run-rate for the rest of 2014, total UK transactions would remain circa 25% below the 2000-2008 average annual residential transaction volume, suggesting further growth potential in 2015.”
At the end of September, Paribas issued a 67-page report on UK property portals in which it said that Britain’s biggest estate agency software supplier, the Property Software Group, could be an acquisition target by Rightmove or Zoopla.
The report said that of the two big portals, Zoopla is “significantly more exposed” to OnTheMarket. It said that the short-term impact on Zoopla was under-estimated.
The report predicted some 2,000 agents to churn from the incumbent portals – 60% from Zoopla and 40% from Rightmove – out of an industry total of 18,000 branches (Rightmove and TPO estimate there to be 20,000).
Paribas expected Zoopla to take “pricing action, while we expect Rightmove will continue its usual pricing trajectory”.
However, the report concluded that it expected both the incumbent portals to be the long-term winners.
See also next story.
Comments (5)
and the sandwich board always predicted "the end is nigh".
Just a thought…Will OnTheMarket actually drive more traffic to Zoopla & Rightmove? Both RM & Z have about 90% plus of properties listed. I was surprised to learn some 30-40% (?) of people only visit one of the big 2 and not both because generally, they get the exact same results so stick with the portal they prefer. If this dynamic changes and agents walk away from either RM or Z then their output will change and give substantially different results (the more successful OTM is, the bigger the disparity) so buyers will have to look on both when previously they didn’t. With OTM’s ‘Only one other portal rule’ buyers will only need to check RM & Z to get the whole market. If buyers search OTM, they wont know which other portal to check so will probably check both anyway! That said, many people now simply search for properties / areas using Google, so OTM will have to compete with RM & Z's SEO or invest heavily in paid for non organic results. Interesting times.
and to think that businesses used to advertise using a man walking up n' down wearing a sandwich board? … ****! Wrongmove & Co will
be trying to sell that to me next month as a New Marketing Product! lol
I'll phone Wrongmove's Head Office just to check if the New Phone Ring Tone has been changed yet? Dah Dah Dah Dah Dah Daaaaah!
….and the cogs of those listed stockmarket companies continue to churn as there is an ENORMOUS financial vested interest to be served to ensure the financial piggies can continue to feed from the dividend and share price trough! I never underestimate Darth Wrongmove protecting Planet Wrongmove…. when their share price slides the PR Emergency Balloon is inflated in double quick time! Have these analysts noted anywhere that AM is not a shareholder driven business? As I say, the stormtroopers are ensuring the financial machine remains well oiled!