Rightmove expects weaker ad revenue growth as more lettings agents join the property platform

Rightmove expects average advertising sales growth to be weaker than initially forecast this year, reflecting greater numbers of letting agents on its platform.

Britain’s largest property portal now expects average revenue per advertiser to rise by £75 to £85 on the £1,431 made last year, having previously anticipated a £100 to £110 increase.

The London-based company said the new figures reflected the shift in customer mix towards lettings agents and housing associations, which tend to have a smaller ARPA.

Over the opening four months of 2024, it gained around 250 new estate agents as members, most of whom were lettings-only branch count and rental operators.

Rightmove also added over 90 new developments to its entry-level access package, which it says is ‘tailored specifically’ to housing associations.

It said that ARPA growth would have been in line with its prior guidance without the adjustment in client base.

Rightmove shares were the biggest FTSE 100 faller by early Friday afternoon, declining by 5.2 per cent to 543.2p.

Nonetheless, the company upheld its annual revenue and margin forecasts, with the former expected to expand by 7 to 9 per cent and the latter to equal 70 per cent.

Customer numbers are also set to rise by up to 2 per cent rather than fall modestly, as originally anticipated.

Johan Svanstrom, chief executive of Rightmove, said: ‘Overall, we continue to expect a better year for the UK property market in 2024 than in 2023.

‘Within that, we see different dynamics across the many segments that we serve, with particular strength in resales.’

Rightmove’s trade has recovered heavily since the Covid-19 pandemic as rents have soared to record levels due to interest rate hikes discouraging Britons from buying homes.

Prices have been further pushed up by many landlords selling their properties after the UK Government axed mortgage interest relief and introduced tougher energy efficiency standards.

Average UK rents rose by 9.2 per cent in the 12 months ending April, according to the Office for National Statistics.

Russ Mould, investment director at AJ Bell, said Rightmove’s highlighting of the shift towards letting agents ‘could be instructive and imply it is finding it harder to secure new customers or upsell existing users in the new-build and traditional estate agent markets.’

He added that this ‘may only add to nervousness about the renewed competitive threat’ from rival company OnTheMarket, which was bought by CoStar Group for £99million last year.