House price propaganda, over-inflated house price indices and endless talking up the market at a local level are all leading to widespread seller expectations being too high.
This is not usually the seller’s fault, it’s what the industry and media are telling them (although there are some who are clearly delusional, wanting more than even the overvaluing agents are saying). There is a long list of contributors to this problem. Right at the top of this list is Rightmove. Rightmove is a great website. It’s convenient, it’s easy to use, it has most property (but not all) and it generates a lot of business for many agents. It will be around for a long time. But, it has carved itself a monopoly position, and this is counter-productive.
Rightmove needs it’s wings clipped. It needs some humble pie. It has evolved a culture of quiet hubris in it’s dealings with agents, and it’s supremacy has remained unchallenged for a long time.
This has led to it being the most profitable company (by margin percentage) on the UK Stock Exchange of all time. It makes over £200m clear cash profit every year. Congratulations.
It can be shown, with more time, that Rightmove’s monopoly is harmful to the housing market. Not Rightmove itself, but its monopoly. There is no one to blame.
Capitalism naturally breeds monopolies which is why there are authorities that exist to act when necessary. But they aren’t in this case. There are no bad guys working at Rightmove, just a large number of employees serving the corporation. It is a machine.
The board of directors controls its direction. The board of directors will, as always and as is required of them, direct that they should avoid anything risky and only pursue courses of action that lead to sustained profit growth.
Fine. That’s normal. But what the directors of Rightmove don’t see, because their positions are insulated from it, is the actual human cost of the following policies:
Relentless price increases causing job losses
1. Relentless c.15% annual price increases for its estate agent subscribers that lead to job losses in small estate agencies who can’t afford not to be on Rightmove, and in the face of falling transaction volumes have no alternative but to let staff go.
Misleading house prices confusing sellers
2. The choice publish a monthly ‘house price’ index based on newly listed asking prices. Because most of these newly listed properties either don’t sell at all, or have to be reduced before they do, they are publishing a highly distorted, inflated view of house prices. For example, they currently state the “average UK house price” as £372,324, when the ONS states the same average UK house price to be £285,000. That’s a difference of more than £80,000. They choose not to publish any data relating to the whole market, price reductions, or sale agreed prices. Their index is then cited as evidence to support the gross over-valuing of homes to convince naive sellers to sign up with dishonest agents who then lock them in to long term contracts, harming their chances of moving. Overpriced properties lead to longer transaction times, that’s bad for everyone. It also increases instances of buyers being tricked into overpaying.
Corporate favouritism
3. Large corporations are Rightmove’s largest clients. They get vast discounts compared to small agents. This means the cost of marketing is disproportionately higher for smaller agents. This leads to most sellers signing up with corporate agents, even when there is absolutely no valid reason to do so. This means that smaller agents receive fewer enquiries for a higher marketing spend than large agents. So their businesses are struggling ever more to win a fair share of homes to sell. All of which is to say that ALL the consequences of their monopolistic policies, while beneficial to Rightmove’s relentlessly growing profits, are detrimental to the housing market, because honest agents, the ones who try not to overvalue homes to win business, are being shunned by sellers.
The monopoly must be challenged to save the housing market.
The monopoly must be challenged, because it is harming the marketplace. The only way to do that is by shining the spotlight of transparency on house prices, thereby showing up the inflated nature of misleading indices.
The reason I have been quieter on video over the last few weeks is because I have been working hard on the next phase of BestAgent. I will be working with as many honest, transparent, high-service ethic type agents as I can find, to bring the Public House Price Index to life, to undermine overvaluing everywhere, and to make moving home fairer for ordinary people.
One specific objective will be to force Rightmove to be more transparent with it’s pricing data. Either to rethink the existing index, or to publish more data on price reductions.
It will be difficult for them, because their largest estate agency clients wont want them to do it. But they may have no choice but to be more transparent.
For now, their hubris will lead them to dismiss and ignore this challenge, as they do all challenges. By working with the better agents of the UK, I will strive to make the challenge from BestAgent the one that makes the difference.