Investors Chronicle says the creation of OnTheMarket was a “logical” step in the light of the Rightmove-Zoopla dupooly - but the “timing was off” and the only-one-other-portal rule has turned out to be a “major flaw.”
The publication says Rightmove and Zoopla are likely to continue expanding, assuming the housing sector remains buoyant, as portal revenue will increase as agents increasingly move away from print advertising.
In 2007, 85 per cent of property advertising was in print; this is now closer to 50 per cent, says Investors Chronicle. A recent survey by [investment bank] Berenberg suggests that there could be a further £195m of revenue set to move from print to online.
Berenberg claims that Agents' Mutual, the parent company of OnTheMarket, has around £8m to spend on marketing in its first year, “half of which has already gone on the advertising campaign at the time of the launch.”
It concedes that overall spending will be higher as member agents spread the word about OnTheMarket, but it says £8m is only the same as Rightmove spent n 2014 and is sizably less than the £20m spent by Zoopla.
“The threat from OnTheMarket may prove to be less than feared, and certainly less than the threat from increased activity in online-only agents and developers to the traditional estate agent” claims Investors Chronicle.
The publication ends by saying that as the most established brand, Rightmove is likely to deliver further growth through higher prices to agents and an increase in premium advertising products.
“The derating in Zoopla's shares - down 30 per cent since last August - following the migration from Zoopla to OnTheMarket, looks overdone. It also has more developer members than Rightmove, so greater exposure to the vibrant new-build market” says IC, although it describes Zoopla Property Group shares as “hardly cheap.”
In the past week Zoopla has had its ‘overweight’ rating reaffirmed by analysts at Barclays while rival analysts at Canaccord have increased its price target for the portal and its status has changed to ‘buy’. Deutsche Bank has reaffirmed its ‘hold’ status.