Rightmove was upgraded on Tuesday by HSBC on positive sentiment, causing its shares to gain 2% before eventually falling back.

HSBC upgraded Rightmove to Buy from Hold and raised its price target to 645p. The analyst cited data from the UK housing market showing signs that the demand “underhang” is beginning to close.

The positive sentiment from agents is not being priced in for Rightmove, the firm states.

According to the Zoopla House Price Index, demand has continued to recover, with the number of new sales rising in May. Whilst, Zoopla stated the annual house price growth slowed to 3% from 4.1% and has fallen by -0.7% over the last three months, they added that the worst of the monthly house price falls are “now behind us.”

Despite a weaker performance in the housing market year-on-year, market activity has continued to improve against 2019 and argues in favour of a recovery. Demand is down 42% year-on-year, however up 14% in comparison to 2019. But, the stock of homes for sale is up 66% year-on-year, providing increased choice for buyers, Zoopla stated.

Semrush data shows a slight drop in organic traffic to Rightmove’s website over recent months. Despite signs of a potential recovery in housing, the economic climate remains challenging, and suggests we should still remain cautious when it comes to demand over the course of the year.