No less a paper than The Times has waded into the long-standing controversy over portals’ “substantial” charges to agents.
The paper’s financial editor, Patrick Hosking, devotes 1,000 words to the subject, describing Rightmove’s pricing power as “Herculean”.
He says that agents feel they have no choice but to use the portals “to advertise their wares”: “Local newspapers used to be the subject of their irritation; now it’s the likes of Rightmove and Zoopla.”
Hosking goes on: “Rightmove charges the typical agency branch £1,077 a month for its homes to be listed on the platform.
“That’s a significant outgoing for a branch, especially when every housing market indicator is moving in the wrong direction — new buyer inquiries, agreed sales and new instructions are all down.”
What rankles with agents, he says, is that they do all the work, while the portals get a disproportionately large chunk of income simply for letting buyers “scroll through homes”.
Hosking also points to the huge wealth gap between portals and agents.
Rightmove “is a cash-generating gorilla” worth £5.3bn; Zoopla sold last year for £2.2bn.
By contrast, Countrywide is worth £80m, Foxtons £179m and even “branchless agency” Purplebricks is worth “only” £330m.
Hoskins maintains that it’s the “estate agents’ own fault that they are not wallowing in all this fabulous gravy themselves”.
Rightmove was started up by corporate agents, who sold their holdings when the company floated.
They made a fortune then. But had they held on, they would have made a further capital gain of 18 times their money plus £1bn of dividends.
Agents, he says, realised their mistake and began OnTheMarket “to win back what they saw as rightfully theirs”.
However, Hosking says that while OTM claims success on several fronts, “it all sounds promising, except for one thing: the stock market doesn’t believe the story”.
OTM made a loss of £7m in the last half year, and was down to its last £8.8m at the end of that period, says Hosking.
He says that OTM boss Ian Springett is upbeat, with the Times article suggesting that if either Rightmove or Zoopla started to feel threatened they would either turn up the advertising taps “or respond with price cuts”.
The full Times article is at the link below but likely to be behind a pay wall.
Yesterday, Rightmove shares touched a record high of 614p before closing at 607p – 1.8% up on the day.
OTM shares closed at a record low of 68p.