If you want to speak to anyone in a pub about the housing market, then there are ten million people better qualified than me in the UK. After all, if I want a Coke Zero it is a lot cheaper to buy at a local supermarket and, with reference to house prices and the like, after we finish the rest of the 2023 price dump I reckon house punters can hope for a 0-2% per annum move over the rest of the decade. The smart thing to do with a house is to focus on owning it to live in. And, whilst some people might get a bit lucky living in one specific location rather than another, honestly you should not be perving over the Rightmove (RMV) website as there are so many better things in life to be doing. And that brings me to today’s full year numbers from Barratt Developments (BDEV).
Ten weeks ago I observed “my continued deep yawn about the world of Crest Nicholson (CRST)” HERE. Since then shares in the housebuilder have fallen by nearly 20%, partly driven by its announcement earlier today.
I have never been a big user of Rightmove (RMV), but I do see that a couple of homes relatively near to where I live have decided to quit trying to sell this year. That is sensible and I am sure they are not the only ones around the country to come to a similar conclusion. How is all this - and lower house prices generally - impacting Rightmove?
Have you enjoyed the first week of July? From an investment perspective it has been a little volatile, but we have all seen it before (and frankly a lot worse). No doubt the “sell in May and go away” fraternity are feeling very excited (even if the average global large cap investor had a pretty good June and, overall, first half of 2023 period). Clearly one dodgy 2023 performer is the UK housing market.
Just over a year ago, I concluded that I was fundamentally unexcited about both Auto Trader (AUTO) and Rightmove (RMV). Whilst I was correct about the latter, the former is actually up about 5% over the last year (and pays a small dividend too). I must admit that I am a bit confused by that, as today’s full year to the end of March numbers may have shown a 16% rise in revenue, but they also showed a 9% fall in profit.
There were “three distinct housing markets” according to the Rightmove (RMV) management team. Despite the fact that the UK economy has moved away from the comedy part of September/October PM, this week’s Nationwide update shows you the reality. The housing market started 2022 in a very hot mood…which via higher interest rates and much more was not apparent by the end of the year. What does all this mean for Rightmove shares, given millions of people still enjoy looking at the company’s website?
It is the last big week of the year for macroeconomic watchers, with the Bank of England, the Federal Reserve and the European Central Bank all set to raise interest rates again. How…predictable. What will interest me is how worried they are about 2023. I see the chancellor has been banging on about a UK economy which is “likely to get worse before it gets better” and “I don't know whether inflation has peaked or not”. Maybe Santa will help out 11 Downing Street? Meanwhile, let’s have a quick focus on what Rightmove (RMV) said today.
After the shocker from RICS the other day, here, Rightmove’s (RMV) latest survey of the UK housing market makes for more grim reading. If you are still a shareholder in Purplebricks (PURP), which could not make money in the good times and so must now be spunking cash daily, why do you have a financial death wish?
In early May I observed that “The Rightmove (RMV) CEO is wise to exit stage left after over 16 years”. The rise and rise of online property porn has been such a huge focus for the average adult over the last twenty of so years. We are - after all - genius new home selectors, ranked only just below the “Location, Location, Location” presentation Gods. So why are Rightmove shares down year-to-date?
I think it was the Welsh poet George Herbert who once wrote “Thursday comes and the week’s gone”. Perhaps he should have looked at the stock market a bit more, because Thursday is always the busiest day of the week for anyone interested in corporate updates. Three pieces of news flow that particularly interested me today…
You all know how to think about Rightmove (RMV). As noted here in February, the average person seems to love checking out what the latest property price in their village or town might be. Even I have checked it out once or twice year-to-date (obviously purely for educational reasons). But I am not surprised that Rightmove’s shares are down 30% year-to-date and neither am I surprised that the stock is down 4% today…
Many stock pickers say something along the line of ‘I spend ten minutes a week looking at macroeconomic matters … and nine of those are wasted’. Even as a complete investment geek, I would agree there is some truth in that. But the reason why I spend about 25% of my time on macro matters is that it helps improve your batting average as a stock picker. Your focus should be bottom-up orientated but regularly doing some top-down stuff is helpful…especially to avoid being in deep panic mode re inflation, interest rates, government policy shifts or geopolitical matters. After all, the whole point of the ‘fear and greed index’ is that you are doing the opposite of the norm at extremity moments. And talking about the norm, how is life going one at one of everybody’s (but not mine) favourite website Rightmove (RMV)…?
Hello, Share Tweakers. Scrolling through the rich Shareprophets archive, I’m surprised at how many times I’ve commended shares in Rightmove (RMV), the housing portal. But my view hasn’t changed, even in these strange times. We are considering selling our South Wales home and the estate agents tell us they’re in the middle of a selling boom. At the same time, there’ve been reports in the press that this won’t last and the current house boom will soon turn to bust…
Hello, Share Plumpers. It takes a brave investor to consider trading the housing market now. Many analysts believe that the virus will knock incomes and make buying a house impossible for many. Others believe that the huge amount of DIY going on in lockdown will make folks happier to stay where they are. Plus GDP is linked to house prices and a virus-led slump in growth would also knock home sales. But there’s also counter-arguments.
I start with Malcolm Stacey's column today and explain why he is wrong in his conclusions about supermarkets. Then I try but fail to answer Leeson's question about the markets. I discuss Zoetic (ZOE), Marks & Spencer (MKS), JD Wetherspoon (JDW), Future (FUTR), Rightmove (RMV) and Purplebricks (PURP)
Hello, Share Travellers. It’s hard to see how the virus will affect the number of homes being put up for sale in Blighty. So it might be a good time to look at Rightmove (RMV). It’s a wormhole to connect buyers with sellers. And I suppose most people seeking a home would have a nosey there...
Hello, Share Twirlers. Twenty years ago, if you wanted to buy a house you turned up in the town and trudged around the local estate agents, of whom there were loads. Now you pop your price range and location into a website and you have all the information you want in a few minutes. You only need to visit a house personally when you're fairly sure you want to buy it.
Hello Share Snatchers. Back in the fifties when dads were obeyed, pater urged me to be an estate agent. I'd rather be a reporter and I summoned enough courage to defy him. And jolly good too, as these days estate agents may be becoming a rarer species.
I'm not entirely sold on the validity of Google Trends data, not least because the top result when you enter the search term "Purplebricks" is generally not the Purplebricks (PURP) website. In fact, the Purplebricks website is generally quite a long way down the list. That's just because other companies are paying up for the search term, perhaps attempting to leverage the company's highly successful (and controversial) TV advertising campaign. However, I pulled together a few of the trends, by geography, over time in the hope it might show something, and I think these graphs should raise a few concerns for the bulls.
I am not a great fan of shorting crazy valuations on the basis that they tend to get crazier. For this reason, I have not been short the likes of Fevertree (FEVR) or Purplebricks (PURP), as calling the top is well-nigh impossible.
Hello Share Swipers. Though I think house sales will remain sturdy, despite the doubters, I am not so sure about internet estate agents. Rightmove (RMV) is one of those companies which you expect to do well for shareholders as internet house-selling seems to be gaining in popularity. But a popular service is not automatically such a good investment.
Zoopla (ZPLA) shares have performed brilliantly over the past few months, rising from a low around 230p to the current 320p, for a mighty market cap of £1.37 billion. As some highly knowledgeable shareholders lighten their holdings, it might be worth others considering whether such a market cap is truly justified.
Hello Share Squashers. Having looked hard for a house in the not too distant past, I can attest to how useful the big online estate agents really are. You just plonk in your location and price range and there you are. Saves oodles of time. It even allows you to know what your chosen house sold for last time and when.
It is interesting that although the housing market is been almost entirely consistent over recent years and months, the share price of online estate agent Rightmove has undulated perhaps rather more than one would have expected.
A look at the chart of the Dow Jones shows that it has more or less gone up in a straight line for five and a half years. The current fall back to start of the year levels looks like no more that one of the various sub 5% blips we have had on this tremendous Bull Run.
OK so I’m a contrarian and as such I am now long blinkx (BLNX). I bought three times on the day of the crash in my mad punting account. (I have this to remind myself of the pain of self-immolation in trading, so I don’t lose track of my customers.) I bought at 40p, 33p and 29p averaging out at 34.1p. Basically, this is where it sits right now. I think it is going up.