Rightmove’s dominance in online property search has been challenged by a US-based company that bought OnTheMarket’s rival for £99m.
Rightmove shares fell by over 12pc Thursday following the sale of OnTheMarket, which was sold to CoStar Group. CoStar Group is a New York-listed company worth $33bn ($27bn) and listed on the New York Stock Exchange.
CoStar announced that it would invest £46.5m in OnTheMarket for the first year, and also set out plans to spend more than Rightmove over the long-term.
Jason Tebb said that the partnership between OnTheMarket and CoStar would allow the company to accelerate its business strategy, “with a clear goal of becoming the leader in the market”.
The increased competition in the online real estate market is accompanied by a background of weakening buyer activity because of high mortgage costs. It has also led to a greater demand for comparison sites, as estate agents use these to increase exposure.
Rightmove’s half-year results for the period ending June 30 showed that the slowdown on the market was beneficial to the business.
Rightmove’s chief executive, Johan Svanstrom said that agents and developers continue to use their products to win [instructions] and home movers continue to trust our websites to help them make informed decisions.
Our performance in the face of a challenging environment for interest rates demonstrates that Rightmove’s business is not materially affected by the property cycle.”
The Halifax house price index shows that the cost of an average property has fallen by 4.7pc over the last year.
The Bank of England has increased interest rates from 5% to 5.25pc.
CoStar stated that the deal “represents a convenient and attractive entry point to the estimated PS8 trillion UK Residential Property Market”.
CoStar’s founder Andy Florance told OnTheMarket that the Washington-based company will give OnTheMarket the tools it needs to “compete with the dominant United Kingdom real estate portals”.