Rightmove share price has more upside as UK mortgage rates rise

Rightmove (LON: RMV) share price has moved sideways this year as concerns about the UK housing sector continues. The shares have risen by ~2% this year while the FTSE 100 index has drifted downwards by 2%. In all, the shares have dropped by more than 12% this year.

UK housing sector challenges

The UK housing sector is going through challenges as the cost of living crisis continues. Data published by Nationwide and Halifax shows that prices have been dropping. A report by Halifax showed that house prices had the worst drop in 12 years.

The situation could get worse in the coming years. Mortgage rates have jumped to the highest level in 15 years. And the Bank of England’s Financial Stability Report showed that mortgage payments for over 1 million people could jump by 500 pounds per month by 2026.

There are other signs that the property market is indeed cooling. In a report published on Wednesday, Winkworth, a leading real estate agent, warned that its profits will be lower than expected his year. The firm noted that mortgage approvals were falling recently.

Therefore, these market dynamics could have an impact on Rightmove, a company that runs a popular home search platform. Historically, demand for housing units does poorly when mortgage rates rise.

Recent data shows that Rightmove’s business has been quite steady. Traffic to its website jumped to 91.7 million in April this month. It then rose to 97.5 million in May and 98.7 million in June. The average visit duration rose to 8:18 minutes. There is often a close correlation between site visits and the company’s performance.

Rightmove will publish its half-year results on July 28th. The most recent results showed that the company’s revenue jumped by 9% in 2022 while its operating profit rose by 6%. The company returned 197.7 million to shareholders through dividends and buybacks. This is an exciting figure for a company valued at over 4 billion pounds.

RMV chart by TradingView

RMV stock price dropped to a low of 489p in June. It then made a strong comeback that pushed it to a high of 533p. It has flipped the important resistance level of 525.4p into a support. The stock has also moved slightly above the 25-day and 50-day moving averages.

Notably, the shares have formed an inverted head and shoulders pattern, which is usually a bullish sign. The Relative Strength Index (RSI) has moved above the neutral point of 50. Therefore, there is a likelihood that the price will likely push the stock upwards to 550p in the coming days.