Stamp Duty Reform a Rightmove

Houses for sale signs

With an upcoming election in May 2015, UK’s Chancellor of the Exchequer, George Osborne, felt compelled to appeal to the electorate and inject a bit of financial feel good that come election campaigning, will be drawn upon to persuade voters that all is well economically.

With a single and unexpected stroke UK housing stamp duty was changed from a very crude slab tax that caused house pricing distortions around stamp duty step changes and seemed to penalise most middle income earners from moving up into properties valued above £250k.

Undoubtedly, these stamp duty modifications should help those making purchases all the way up to house price valuations at about £937k and provide committed house buyers with an unexpected bonus that could be re-appropriated towards deposits, thereby satiating stringent lending requirements a little.

All in this sounds like a big win for Rightmove and could well compound on some impressive website visitor numbers achieved before these stamp duty changes were announced.

On 06 November Rightmove announced a 5% increase in member numbers (year to date) to a record 19,320 agents and that average revenue per advertiser was growing. Additionally it was stated that home hunters were visiting more often (page impression up 7% - year on year) and that depth of enquiries was up 12% to 3.9m enquiries per month.

Austerity, strict lending rules and harsh stamp duty requirements have taken their toll on the average family’s ability to move into their desired home and at last a bit of common sense has been unleashed to ameliorate the financial squeeze at ground level.

Technically, this has occurred at a great time of year for Rightmove! Buying Rightmove shares at their December nadir every year since 2009 and holding through to May would have seen average gains of 42% along the way (assuming exact timing of peaks and troughs). Should this occur again in 2015 Rightmove shares would be back at record levels of circa £28.

Given that George Osborne will be emanating ever positive financial noises up until the election, it seems that any good news surrounding housing sales will be portrayed with effervescence during a historically good time for UK housing market – Spring.

Although long overdue, stamp duty reform could well inject an abundance of feel good and prove to be a right move for Rightmove.

Date Company Status Mid Price Target 1 Target 2 Target 3 Target 4
30/12/2014 Rightmove Initial write up £22.30 £23.40 £26.11 £28.86 £35.52

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