City expresses confidence in Rightmove's business

Shares in Rightmove have strengthened after City analysts expressed confidence not only in the company’s management team but also in house price recovery in 2010.

Ironically, asking prices for new properties on Rightmove – according to the company’s house price report, out today – have fallen back by 0.4% so far this month, but still show a rise of 6% since January.

This optimism is despite a growing number of price cuts of houses that have stuck on the market: there were 62,519 price reductions in June, reported on Rightmove’s Property Deal Weekly, compared with 59,072 in May.

The site also reports a severe shortage of new instructions – 52.3% down in London, 45% in the south and 39% in the north compared with a year ago.

However, agents still remain stuck with a lot of their older stock: average stock per branch remains at about 70, as it has for the last six months.

Rightmove commercial director Miles Shipside said: “We would normally expect this to fall, given the lack of new stock coming to market, and the pick-up in sales and mortgage approval figures. This confirms reports that fresh stock of the right type is saleable if priced correctly. However, older stock is far less saleable if it does not match current mortgage lending criteria.”

He warned: “It’s a mistake to confuse the upturn in inquiries and sales with a return to a more normal market. While conditions are much improved on the darkest days of last year, we are now starting to see some big distortions and wild swings due to the combined effects of recession and restricted mortgage availability.”