Purplebricks launched yesterday in Australia – weeks ahead of expectations, and apparently catching the market on the hop – and with CEO Michael Bruce reiterating that the UK business will become profitable “during the course of this year”.
Purplebricks had previously said only that an Australian launch would be before Christmas.
At the start of the weekend, it had a website up and running in Australia and the Australian press has now reported the launch – with one headline suggesting that Australians’ dislike of estate agents will fuel Purplebricks’ success.
Purplebricks itself made the announcement in the UK yesterday. One striking feature is that it will be charging Australian sellers far more than British ones – over three times as much.
The firm, which made UK revenues of £18.6m in the year to April but £12m losses, is to plough £10m into the Australian business over two years. It is initially focusing on Melbourne and Brisbane before rolling out to Sydney, Perth and Adelaide later this year.
It believes it can break even there within that time, by undercutting the average 2.2% fees charged by existing agents. Purplebricks says the Australian residential property market is worth £3.3bn.
Australian Purplebricks CEO Ryan Dinsdale has been recruiting local property experts and Purplebricks launched with 50 in Melbourne and south east Queensland.
Sellers will be charged a flat $4,500 (£2,616) fee to sell their home through Purplebricks. For those selling a $614,000 (£357,000) median-priced home this will be $11,500 (£6,690) cheaper than if they used a traditional Australian estate agent charging a 2.2% commission.
The £2,616 fee compares with £798 in the UK (£1,158 in and around London).
The Purplebricks price in Australia includes photography, marketing and advertising on the UK equivalents of Rightmove and Zoopla, Domain.com.au and RealEstate.comau.
With auctions playing a strong role in the Australian property market, Purplebricks is offering an additional auction facility, with a top-up fee of $825 (£480). This includes an auctioneer and all open housing viewings accompanied by a local property expert.
In an interview with the Australian Financial Review, Purplebricks CEO Michael Bruce said he was confident of emulating the rapid success achieved in Britain, where Purplebricks has grown to be Britain’s third largest estate agency in under two years.
He told the publication: “Australians are infatuated with real estate. For us, it’s great because it means they will embrace our model as they have done in the UK.
“We grew to 300 local property experts in the UK in less than two years; it could be a lot quicker in Australia.”
The article also refers to Purplebricks’ successful float on the stock market, with a market value of £300m ($520m), which is three times more than Australia’s only listed agent McGrath.
John McGrath, executive director, said: “Most of our clients have no issue with the fees we charge.”
Another story in the Australian press quotes from a report commissioned by Purplebricks which says that estate agents are earning far more than they did 30 years ago: from $1,970 to over $13,500, because of house price inflation.
The same story also says that Purplebricks has a “nearly identical model” to Hello Real Estate which launched in September last year. In January, it abandoned plans to list on the stock market, while the number of licensees has dropped from 41 to 30.
It draws attention to Purplebricks’ losses in the UK, but quotes Bruce as saying that the business will become profitable in Britain “during the course of this year”.
Dinsdale says on his LinkedIn profile: “I am extremely privileged and excited to be bringing Purplebricks to Australia.
“We are changing the way Australians sell real estate, giving them the best experience through incredible service and saving them thousands of dollars along the way.
“Purplebricks has been a huge success in the UK and we believe it is exactly what the Australian public have been waiting for.”
As well as Dinsdale, the management team in Australia includes Luke Pervan as national sales director, and Joby Russell, chief marketing officer, who relocates from the UK business.
As chief marketing officer of Purplebricks in the UK, Russell caused a stir last month when he sold 243,618 shares shares at 140p per share, netting him £341,065 after owning them for just ten days.
He had exercised an option to buy them at 12.93p, costing him a total of £31,499.
In ten days he therefore made a profit of £309,566 – equating to £30,956 per day for ten days. We carried the story here
Bruce himself said in yesterday’s official announcement in the UK: “Australia is a natural second market for us to target. It is a large and fiercely competitive real estate environment, but one where sellers are currently receiving poor value for money.
“We will offer the Australian public far greater transparency and a fairer way to sell their homes.
“We are very excited about the size of the market opportunity there, and believe that the expansion outside of the UK provides both additional returns for investors and the benefit of diversified income streams.”
“We’ve blown through shareholders money in this country. Time to find some other poor burgers who will fool for our speal.”
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Not since 1867 have the UK transported nefarious characters to Australia……
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This is really interesting. I’m looking forward to seeing how this pans out. Thing is, the concept of purple bricks is great but in reality I’ve learnt that the public do not just want to deal with 1 individual that works from home and they prefer a no sale, no fee model. The likes of purple bricks and other similar companies have only done so well, as we’ve been in a property market, where houses have practically been selling themselves! That’s now changed, so let’s see..
I don’t know what Australia is like, but I’m sure they’ll welcome the fee reduction but that won’t be the problem, it’ll be trying to convince a client that you have a database of prospective buyers. I think that’s how Australia works, it’s about the database more than anything. Tell me if I’m wrong.
Plus, the only people that win here are the people at the top, creaming off the LPE’s. It’s the same as most things. Get as many LPE’s as possible, not bothered how well they do, but just keep recruiting them until we’re making money. It’s all a mask.
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For those of you who give a shizzle – here is their Aussie website:
https://www.purplebricks.com.au/
They’re ALREADY claiming to be the “Best Estate Agent” – with ZERO stock!
You couldn’t make it up… oh, wait…
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They are displaying the TrustPilot reviews from THE UK COMPANY on the Aussie website!!
Seriously – more neck than a tower of giraffes…
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They are showing reviews for the Aussie LPE’s such as:
“Tim sold me my home 16 years ago and has just sold it again for me so I can enjoy my retirement.”
Considering they haven’t taken on a single listing and this is a historic comment – surely this is misleading?
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It’s unbelievable. If it wasn’t so believable!!!
Anyone know if AU law is similar to UK law?
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Out of the mouth of one of their perma-tan can rattlers ( the ones who go out to get investment cash from stupid people) came these words…. “If the rules don’t suit, break the rules or ignore the rules”
The law, rules, decency, honesty are weapons to be used against competitors who think such things matter.
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And does anyone know at which point during the year they are supposed to become “profitable”?
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Which year are you referring to FP?
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Good question PeeBee
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More’s to the point – if/when it doesn’t happen – is the CEOs neck on the block?
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It looks like it’s the same this ” No upfront fee” business model.
a big difference from . NO sale, no fee. Are Aussie sellers are prepared to risk £2616?
i love the quote, a reputation for getting the best price.
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Are Purplebricks aware of the sheer geographical scale of Australia? How local will there LPEs be? Like their Liverpool and Manchester LPE, will there be 1 LPE who covers both Perth and Sydney..? Will he be flying with the Flying Doctors?
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I recently posted that PB shall have to either triple their listings or triple their fees in 2016 based on £18 million spend, £12 million loss and £6 million turnover in 2015.
Their average fee income per instruction in the UK is around £900 so if they triple this fee to BREAK EVEN in the UK that would be £2,700.
The fee in Australia is £2,616.
So it appears to me the UK model was an experiment to fine tune the Australian model after all.
As I have said before…. Will UK shareholders have a share in any Australian ASX float? If not why not after all they funded it!
PB need to get cracking in Australia before investors/stock market lose faith and certainly before 2016 financial results.
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Has anyone noticed how bad a reputation PB are now getting here in the UK with the public? I see many conveyancers are adding fuel by confirming poor service standards! Is the honeymoon over? Unlike the UK, the Ozzies take no prisoners when they find out if someone dupes them.
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G’day!
Am I the only one that read this whole article in a slightly Aussie accent…?
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Strewth, mate – I’ll bet you a dingo’s danglies you’re not alone, cobber!
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this article is completely believable !
Except the line “CEO Michael Bruce reiterating that the UK business will become profitable “during the course of this year”.
That’s not so believable !
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His brother must agree with you too, Kenneth Bruce resigned as a Director back on the 19th Nov 2015
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MANY PEOPLE WOULD LIKE TO KNOW HOW MANY INSTRUCTIONS PB DREW IN DURING 2015?
Could the answer be in my previous posting below?
It appears to me that online call centre business plans are proving to be terminally flawed as they are simply replacing branch costs with national advertising costs for a lesser service and unsustainable low fee.
The good news for branch based agents is that PB appear to have now shown that their true cost to handle a property transaction with a limited service is not £900 but close to £2,700 to BREAK EVEN.
This is maybe why PB’s Australian offering is £2,616.
PB UK ‘investors’ appeared to subsidise every instruction ( 6,666 approximated instructions) by around £1800 each in 2015.
Thank You PB – for showing what full service agents have know all along. The best deal is to surely use a personal, local, branch based property expert who charge a fair fee for their SERVICE on a no sale, no charge basis. Let us not forget that in the average market UK full service agents are amongst the best value in the world.
The maths:
6,666 instructions x £1,800 investor subsidy per instruction = £11, 998,800. PB lost around £12 million in 2015.
6,666 instructions x PB average fee of around £900 = £5,999,400. PB turned over around £6 million in 2015.
Therefore £1800 + £900 = £2,700 approximated actual cost per listing.x 6,666 approximated instructions = £17, 998,200.
PB approximated total spend for 2015 around £18 million.
Can this truly shocking arithmetic be correct?
I personally do not believe that home owners will wish to use this on line agent if they charge £2,700, even on a no sale, no charge basis!
Roll on 2017.
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