CoStar's Blink = Shrink

Remember when CoStar took over OnTheMarket and was going to dethrone Rightmove?

Last week, the American property data giant quietly filed some forms with the US stock market that should have every UK agent sitting up straight. CoStar is slashing its investment in (Stateside Zillow competitor) Homes.com by $300 million this year - a 35% haircut - and will keep trimming $100 million annually until 2030. Profitability? Not until the end of the decade. Traffic? Still miles away from Zillow – and arguably yet to break into second place beyond Realtor.com.

The stock dropped 10% in a day. Investors aren't impressed. And, in hindsight, I guess we shouldn't be surprised.

When CoStar acquired OnTheMarket at the end of 2023, I was one of those that was super-excited that RM might finally be getting a big-punching competitor. CoStar was worth $34Bn v RM’s ~$8Bn. Popcorn out – this was going to be a slugfest.

Fast-forward two years and … well things just haven’t really changed, have they? On my 60-day, 60-location Tour this week (join me here!) there were plenty of agents that had cancelled their OTM subs but been left on the site for free, presumably to bolster ‘membership up!’ reports to investors. After a £43.5m claimed adspend in 2024 failed to move the needle, 2025 saw very little observable activity. We waited to see when they would rebrand, as announced by none other than CoStar CEO Andy Florance himself at the end of 2024, but tumbleweed bounced through the OTM streets all last year.

Then, when I was watching Gogglebox last week, I was very surprised to see an advert for the old OnTheMarket brand - the pre-CoStar takeover one with the guy's hand smashing through the wall. Are they now reverting to spending money pushing OTM as a brand again? Or was that only to try and bolster some agent leads and avoid even more cancellations before a relaunch as Homes.com/uk in the coming weeks?

And how does any of that square with their American parent company suddenly discovering that "growth at all costs" isn't sustainable?

CoStar's retreat exposes the fundamental tension in portal economics. You can either chase traffic with billion-dollar ad campaigns (CoStar spent $850 million on Homes.com last year), or you can try to turn a profit. Doing both simultaneously? That's proving rather tricky. The numbers are brutal. CoStar's selling and marketing expenses hit $1.36 billion in 2024 - half of total revenue - leaving operating income nearly flat. All that spending, and they're still not touching Zillow in their home market.

Now apply that lesson to the UK. CoStar frames OTM as part of its "residential portfolio" alongside Homes.com, Domain (Australia), and Apartments.com. The company talks about a "proven playbook" and "scalable AI platform" delivering efficiencies across all properties. Translation: expect tighter budgets. OTM claims genuine progress - 76% growth in sales leads, the "fastest-growing UK portal" by traffic. But that growth was fuelled by £46.5 million of CoStar investment in year one. If the American mothership is now focused on "disciplined capital allocation" and "shareholder returns," those investment taps won't flow quite so freely.

Here's where it gets interesting for agents. Agent-paid portal economics only work at scale. Rightmove's cold, ruthless genius was achieving near-monopoly status before anyone noticed, then ratcheting up prices year after year. CoStar tried to buy their way to that position. It's not working. Meanwhile, ARPA (average revenue per advertiser) keeps climbing. Rightmove's heading toward £1,750 per branch per month – and that’s average, meaning smaller agents offsetting the huge sweetheart deals for the corporates and eXp. By 2028-2030, RM’s CEO – Johan Svanstrom – said himself that they’re aiming at above £2,000 by 2028, which will go to over £3,000 per month in 2030 on the same trajectory.

That's not a portal fee - that's a second rent payment.

The CoStar pullback signals something important: even deep-pocketed American disruptors can't profitably outspend incumbents forever. The portal wars aren't going to be won by whoever has the biggest advertising budget. They'll be won by whoever builds something fundamentally different.

Three things to remember:

• First, don't bet on white knights - OTM isn't going away, but expecting a rescue from overseas capital looks increasingly naive. CoStar's shareholders want returns, not UK agent liberation.

  
  

• Second, the portal model itself is the problem. Whether it's Rightmove extracting £2.5 billion over 25 years or CoStar burning $850 million annually, the centralised portal model creates either extractive monopolies or unsustainable challengers. Neither serves agents.

  
  

• Third, technology is democratising. The same AI that CoStar says is "delivering efficiencies" is available to everyone. The tools to match buyers and sellers, to generate content, to provide instant valuations - they're no longer locked behind billion-dollar data moats.

The CoStar blink isn't just American financial news. It's a signal that the portal era's business model is hitting its limits. The question for UK agents isn't which agent-paid portal to back. It's whether portals - as we've known them - are the future at all.