This week has been a busy one for portal activity - and not just homeowners coming back from holiday and deciding they need to move as far away as possible from their families.
As we report elsewhere, three big stories broke this week
There's a new challenger in town;
There's a new business model being tested and;
There's a demographic shift in how younger people search for property.
Does this mean that change is afoot - and we might finally see Rightmove's dominance start to ebb?
I think that each of these developments creates its own moments of danger for the UK's dominant property portal. Let's look at each in turn.
1. The new challenger: Jitty
Jitty is a new property portal which - guess what? - aims to challenge the dominance of Rightmove. Like moths to a flame, founders - many (though not all) from outside the industry - cast around for ‘most profitable online spaces’, discover Rightmove’s Financial Reports, see that they make 73p profit in every pound, and wonder how they can get a piece of that fat bottom-line action.
So what chance does Jitty have, 15 years after Zoopla and 8 after OnTheMarket? Well, they’ve passed the first test - can they convince investors to back them? And these investors are no slouches when it comes to tech cash either - it’s Google and … who’ve piled in. The £2m is a good start but it will take much, much more to really compete with the obscene millions that Rightmove has to brush them off with (or even displace one of the challengers).
They’ve positioned themselves strongly on the AI side - which they have to do, of course - and it remains to be seen if they can build something outside the ecosystem, whilst the likes of SearchSmartly are pitching at the current portals themselves. But perhaps these guys have the best chance of many over recent years - the combination of Google and AI might just bring something fresh into play that consumers and agents can really get behind.
2. The new business model: Zillow’s Down Payments
One of the things that Rightmove has always struggled with is innovation. As the incumbent, spitting out cash to its investors in ever-increasing quantities each quarter for over 20 years, it decided long ago that it was basically going to ride this same pony into the ground - not changing the business model, not altering the product, for fear either might bring premature death.
Whilst I’ve speculated in the past about how things might change under new CEO, Johan Svanstrom, to this point the hardest decision the Board has been making is how many shares to buy back - generally accepted as a proxy for “We can’t think of anything else to do with all of this spare cash”.
This has not been a problem for international peer, Zillow. They have been relentlessly innovating over many years, learning and iterating - failing, to be sure, as with their home-flipping business but all the time looking for different ways to service their customers and build value.
Their latest wheeze is quite the eye-opener - they’re offering up to 2% of a home’s deposit to certain first-time buyers, to enable them to get on the housing market. It’s trying to solve the problem that many of us are, including ModelProp - how do we help more people to achieve their dreams of home ownership?
It’s a bold move, currently only being trialled in Arizona, but is another indication of the creativity and focus that drives one of the biggest property technology companies in the world. It would be wonderful to see our cash-rich UK equivalent trying similar things for their customers and our market too - but, like most, I will not be holding my breath.
However, it might give Rightmove’s competitors some pause for thought. When we first set up Zoopla, we did more than borrow Zillow’s first letter - the Automated Valuation Model (AVM) which made our name, the first in the UK back in 2008, was inspired by what we saw Zillow doing in the States. Perhaps there will be a bigger threat to Rightmove from one of their challengers seeing this as a viable differentiator for consumers? Perhaps - but it’s likely to be a little while before it shifts the dial too much.
3. The demographic shift: Gen Z’s don’t use portals
Often overlooked by the property industry because they don’t have the buying power of their parents (or grandparents), young people today just haven’t got into a portal habit. They favour influencers, personal recommendations and reviews to guide them to the right agent rather than the aggregators used by their predecessors.
This offers some optimism for Rightmove clients who may wish to remove themselves from what I still hear called ‘necessary evil’ by agents. Obviously, at ModelProp we think that the future is going to involve a whole load of AI doing the dull stuff, mixed with human interaction doing the fun stuff - and this means that new ways of appealing to these future customers will arise.
However, it’s going to take time. Until then, it’s unlikely Rightmove is going to stop its annual 15%+ price increases, further putting pressure on agent resources regardless of the state of the market.
These three stories coming out in the same week may sow some seeds for the future impairment of Rightmove’s relentless growth. In the meantime, agents are going to need to find fresh ways to win market share and cut costs - and, right now, AI is the place to start.
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