UK housing market 'in grip of major downturn' but Rightmove's profits rise

Property website Rightmove said the housing market was now in the grips of a "major downturn" and warned today it expected estate agents to leave the industry in greater numbers over the rest of this year.

The search engine declined to predict the likely depth and length of the downturn, but said its service represented a "cost effective" means of advertising for agents increasingly looking to reduce overheads.

Announcing results for the six months to June 30, Rightmove said overall membership grew 5% to 19,301, despite a 3% decline in the number of estate agents using its service to 11,984.

The biggest increase came from new homes developers, up 16% to 4,022, as firms bolstered their online marketing in an attempt to shift properties.

Rightmove's half-year revenues rose 49% to £37.8 million, while operating profits were up 58% to £20.8 million.

Managing director Ed Williams said it was likely members were cutting back on print advertising in order to survive the property market downturn.

He added: "We are redoubling our efforts to ensure that Rightmove generates the enquiries from prospective home buyers which our customers so desperately need."

Rightmove, which has around 90% of the UK's estate agents as advertisers, said average customer spending rose 35% to £317 a month. The biggest increase came from developers, which Rightmove said reflected the lengthening in time taken to sell homes. It added that it had also focused resources on housing associations and social housing providers.

The company has also come up with initiatives to help customers through the downturn.

However, it added: "In our view, the remainder of 2008 will see estate agents leaving the industry at higher rates than in the first six months of the year as conditions continue to toughen. Indeed, given the current low level of transactions in the market, it is probable that 2009 will also see a further decrease in the number of estate agents trading."

It emerged earlier this month that Rightmove faced possible competition after the National Association of Estate Agents' (NAEA) said it planned to launch Property Live - allowing its 10,000 members to advertise with no charge.