For the last year and a half, the UK’s property market has boomed. Record low interest rates, temporary government cuts to stamp duty on purchases up to £500,000 and a competitive UK mortgage market - where deposit requirements remain low price – have all played their part.

by James Ayling

Research Analyst

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Yet, given the economic uncertainties posed by COVID-19, the property market strength is economically surprising. House prices rose annually by c. +7% across the UK (according to Nationwide) to the end April - one of the fastest annual increases in nearly two decades. 

Rightmove seems an obvious beneficiary of the ‘boiling’ UK market with its two-sided marketplace. Rightmove benefits from a powerful network effect whereby the more agents listing properties , the more potential customers view properties on their website, which drives a strengthening proposition – more choice and more views results in more Rightmove led sales. 

If you distil Rightmove’s business model down to a simple classification, it is an advertiser. Yet, its value-add, for me, is primarily dealing with a fairly illiquid asset class in an asset-light approach. However, be warned; if inflation returns and interest rates rise, I suspect housing market volumes will decline. Despite its asset-light approach, I would expect Rightmove to be vulnerable.

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