Online agents’ share of the market has gone up 19% year on year – but still represents just under 5.5% of the market overall.
The finding is in a new report, out today, which says that the growth in online market share is testament to the power of advertising and the huge sums that have been spent on TV and radio adverts.
It is the second time that customer intelligence firm TwentyCI has issued a quarterly ‘home mover’ report. Its latest covers the three months to September.
While the firm is largely unknown to the industry – its customers include the likes of Heinz – we are told it does work with a number of estate agents, and that its interest in the property sector will become clearer as the months go by.
It claims to have exclusive access to over 29bn pieces of data covering property purchases and rentals.
Its new report says that in the third quarter there were 6.2% fewer home moves than in the same period last year.
However, exchanges across the UK were up 15.2% on the same period last year, with prices increasing by 1.5%.
In London exchanges were up by 9%, and prices down by 8.4%.
It was a patchy picture elsewhere, says Twenty CI: in Scotland and Wales, exchanges were up 30% year on year, but in the south-west were down 6%.
Today’s report finds the shift towards online agents continuing, with a 19% increase in market share meaning it now has 5.4% of the market, measured in terms of exchanges.
Colin Bradshaw, chief customer officer at TwentyCI, said: “The growth in online estate agents is testament to the power of advertising.
“We’ve seen the big players spending huge sums on TV and radio promotion.
“As the concept of online estate agents matures and consumers see more of their boards on display, it is likely that more people will see them as a credible alternative.
“That said, the online-only market is still a very small proportion of the overall market, so I doubt established agents are quaking in the boots yet – but now should not be the time for complacency either.”
Overall in the quarter, it says that in round figures, 261,000 exchanges took place.
Of this number, 246,667 were exchanges through high street agents, and 14,003 were exchanges through online firms.
A total of 64,000 deals fell through; 198,000 homes were withdrawn; and 271,000 were sold subject to contract.
A total of 308,104 properties, both sales and rentals, were new listings.
The onliners market share may have grown but at some point they are going to have to start making some profit. If PB cant make any profit of significance there is little hope for the others to do so. Also with them having no local presence and homeowners becoming less willing to have for sale boards up these days, the constant needs for TV campaigns will be there, meaning another heavy drain on profit making potential
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Since I’ve been monitoring PurpleBricks their market share has grown by approximately 0.1% a month in the UK (estimated).
The UK pretty much broke even for the financial year to the end of March 2017.
Keep advertising costs at the same rate and market share growth at the same rate then all added revenue after the LPE cut is pure profit. In September last year Hardman & Co estimated the market size as a whole to be 1.4 million listings. I think it’s actually been less than this recently so let’s say 1.3M as a better estimate.
So if market share growth is 1.2% a year then you are looking at them adding 15,600 listings a year.
I’m not sure what the LPE earns from each listing but let’s say £300. PurpleBricks have said the revenue per listing is close to £1100 now and that’s at the current price to the consumer. There may well be a price increases in the pipeline but let’s assume not.
So given all the assumptions this would equate to profits of £12.5M (UK) for this current financial year, £25M for the next and so on as long as market share growth increases at around 1.2% a year and advertising and other fixed costs remain constant.
Lots of assumptions and estimates and do your own research.
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I’m all for a company having success, but like any that have one eye or maybe both on their share price, their success is always going to be optimistically reported. So far the onliners have failed to live up to their own projections, so I would have to presume that these latest projections will also not be met. Lastly as with any market, the online share of the housing market is at this point going to be limited to a certain percentage. Only a certain amount of vendors will consider the pay anyway option, and they will choose one of the onliners who are now fighting over this 5% share of the market
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>So far the onliners have failed to live up to their own projections
ArthurHouse,
I have only been following this story since early this year but the forecasts that I have seen for PurpleBricks UK have been met or have been very close.
For the last financial year just gone, PurpleBricks increased UK revenue by about 100% which is what was being estimated by Hardman & Co. who were using data provided by PurpleBricks but making their own forecasts.
Of course the current estimates may not be met but there has to be some level of confidence in them based on the growth of the UK business over the last 2 financial years.
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“…and they will choose one of the onliners who are now fighting over this 5% share of the market.”
To think that the online will remain capped at anywhere near 5% is naive in my opinion.
A few years ago it would have been harder to believe but the shift is happening, just look at justeat for takeaway or uber for taxis. They’ve carved their market extrodinarily quickly.
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Huge assumption that their market share will continue to grow.
Given the amount PB and the other onliners have spent on TV, PR etc you could argue that their awareness amongst the public has peaked.
You could also argue that once word starts to get around that people are paying up front but not actually selling, the concept will be seen as flawed and people will feel conned.
“Conmisery” could become the new term associated with online estate agency…
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Shaun77,
>Huge assumption that their market share will continue to grow.
>Given the amount PB and the other onliners have spent on TV, PR etc you could argue that their awareness amongst the public has peaked.
Yes. It’s a huge assumption that market share will continue to grow. Awareness may well have peaked but the amount of people willing to try something different may still grow. The house-buying demographic will certainly change as the technophobe is replaced by the iphone generation.
>You could also argue that once word starts to get around that people are paying up front but not actually selling, the concept will be seen as flawed and people will feel conned.
That’s a huge assumption too.
There’s a long way to go. Lots of learning to be done by the public. What is the actual commission being paid? Why do traditional agents charge a percentage of the asset they are selling? Are they price fixing to rip the public off? Improved levels of service from the online agents. More traditional agents unable to compete and closing down.
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PurpleBricks have said the revenue per listing is close to £1100 now and that’s at the current price to the consumer
Since many people will be paying the £849 that must mean many people are also paying £1,350+ to make the average £1,100. So where is the extra revenue coming from? Also is the £1,100 counting VAT….do they include VAT in their revenue?
If they don’t count VAT it means many people must be paying nearly £1,500 to make the average £1,100. That’s not far off what we charge on a no sale no fee full service basis…….and when you take into account the ‘investors subsidy’………
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AgentV,
I’m not sure how they work out the average revenue but remember the fee is higher in London and there is other income that possibly doesn’t even come from those selling with them. PurpleBricks said a while back that data sales would become a significant income stream.
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cyberduck. What youve done there is taken £300 away from £1100 and multiplied it by 15600. That gets 12.5m. What youve then done is the classic purple bricks “mistake” by declaring that as profit. Without going into all the costs that would apply to running this the glaring expense is £1m per month on advertising. So, start there and do the rest of the costs and Im sure youll get a proper answer. The wheels are starting to come off this purple thing and if they fail, all others in the online space have got no chance.
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inthefield,
The 15600 listings is the estimated yearly growth on the current level of listings which were around 40,000 in the last financial year.
The 40,000 listings are paying for the current level of advertising and fixed costs so the estimated increase (less LPE cut) goes straight to profit.
>The wheels are starting to come off this purple thing
I’ve been hearing this since i started following developments. “It’s all smoke and mirrors”, “Double listings” etc. The bottom line is that financial results are audited. I’d trust the auditor over PurpleBricks’ competition any day.
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Ok cyberduck. That makes more sense. Even so, the predictions since they started have never been achieved, not even close. Whilst I do take my cap off to them for an epic entry into the space I honestly feel its at tipping point. The fees charged can only be justified if they take a whole lot more of the stock (not 5.5%). If they dont, they have no choice but to increase fees. At that point their USP starts to become a nonsense. The bad publicity that they are receiving will only intensify the longer they mess with reviews and I think its a matter of time before a whistle blower tells us the whole truth of being a PB employee.
Youre right about the audited figures which I await with baited breath.
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Lets hope the audit includes the FACS……Fee Average per Completed Sale!
By the way, to satisfy Cyberduck claiming no other agent declares their FACS….. our FACS is £1,995.
Our FANS (Fee Average per No Sale after 3 months) is £0.
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AgentV,
So what Agency are you? It’s all very well announcing some statistics but nobody knows who you are. What about all the other Agents? Are they going to post their statistics anonymously on here too?
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“I think it’s a matter of time before a whistleblower tells us the whole truth of being a PB employee.”
It is already happening.
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A 19% jump to a whopping sub 5.5% after many multi-Million per month advertising campaigns by the leading players and still down from last years (claimed) 6%. Tell me again why some Agent’s are worried by the online players?
I have nothing against the call centre model as long as it trades within the law. The trouble is, it seems to have to keep trying to mislead the public and investors to get them to part with their money.
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I’d be very interested to know exactly how TwentyCI actually define “online estate agents”.
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This is nothing more than the 1990’s dotcom boom and financial institutions that came into the market with such predictions etc etc and none are left. Profit margins are not there, heads buried in the sand. Agents just need to weather the storm as they did back then and for some, that is going to be difficult. The real winners will be the agents who continue to provide a very good service. PB and the like, days are numbered, the gravy train will run out and that is all that is keeping them going.
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Woodentop,
>This is nothing more than the 1990’s dotcom boom and financial institutions that came into the market with such predictions etc etc and none are left.
Ever heard of Google, eBay, Amazon, Facebook?
Rightmove even?
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Google, ebay, Amazon and Facebook do not have the onerous contractual obligations to principals the all estate agents have.
No sale no fee commission is effectively a bi-product of case law precedent; you can charge for success but failure goes un rewarded. Properties are usually valued to attract interest and have a sale completed within 3 months. Outside of that an agent runs a risk of bad advice which case law dictates brings with it forfeiture of fee and the burden of loss by the principal.
Fee to list agents who purport to be estate agents have inadvertently created the situation where a liability is building up; it is taking fees from people who never achieve a sale. Passing a listing service off as an agency service might be great for fee comparison but it is simply naive to think the sector can disregard the duties and obligations of agency It won’t take much for one of those who have been given negligent advice to open the floodgates for PPI style claims. The claims won’t be restricted to the fee paid, if a vendor can show financial loss the agent is liable for that too. It’s not hard to see if properties are unsold when interest rates rise & the market collapses an agent could reasonably be held liable for over egging the price and giving negligent advice that meant a property eventually sell well under what could have been achieved with proper advice.
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>It won’t take much for one of those who have been given negligent advice to open the floodgates for PPI style claims.
Are you sure that it’s as clear cut as the PPI situation?
For there to be binding legal precedent then firstly a case must i) be decided in a higher court than one where binding precedent is being claimed ii) the cases or at least some of the legal principles must be very similar.
So for example a case decided in the County Court would have no binding precedent whatsoever on any other County Court case but a case in the High Court would be binding on a future County Court case but only if the cases were very similar. So for example if somebody had a case in the High Court and negligence was demonstrated because, let’s say, the LPE left, then this would only set precedent for other cases with the same circumstances.
Robert, are you aware of any High Court cases? If so, would the circumstances be the same as other cases? If not, then I imagine it’s just wishful thinking on your part.
>It’s not hard to see if properties are unsold when interest rates rise & the market collapses an agent could reasonably be held liable for over egging the price and giving negligent advice that meant a property eventually sell well under what could have been achieved with proper advice.
All very difficult to prove and you need to prove the amount of damages so without that market collapse you’re not really talking about significant damages and the same would apply for a traditional agent when they over-egged the price would it not?
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the precedents for both duty of care and skill and duty to act are established.
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In one case they might be but if it’s not in the High Court or higher it’s not binding on the County Court. If the circumstances in another case are different the one where negligence is established then again it wouldn’t be binding precedent.
So back to the drawing board on that theory unless you are aware of a case in the High Court with universal ramifications 🙂
I won’t be revisiting this thread now.
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Oh please come back, I’d like to investigate why you are now claiming the precedents students of estate management study as part of the professional qualifications aren’t applicable.
Is there any one or any thing on this earth that isn’t wrong because you know better?
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Robert – you know his M.O, by now – quack into the room; chuck in a lit firework or two and the second we point out that the squibs are not just damp but wringing wet he flies off with an @r$e full of lead pellets, never to be seen again…
…until the next appropriate article.
#duckshoot
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He’ll be back but in case you miss him, you can always find his on-going PB-based warblings on London South East share chat.
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Yes, so? What’s the relevance? Ever heard of BA, Cadburys, Rolls Royce, Virgin!My post is about those that came into a specific market and failed, Your comparison’s are about businesses that started up new
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So just to be clear, what exactly is the specific market you refer to where “none are left”?
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Estate agency
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Oh dear, you seem to have backtracked.
So this 1990’s “dotcom” phenomena where nobody is left just seems to be a throwaway remark.
I’m not returning to this thread.
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You said that 3 minutes previously.
1st rule of flouncing; If you’re gonna flounce make sure you’re done!
2nd rule; make sure you have your keys
Coming back for any reason destroys the full drag queen drama of a massive flounce
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Here is where things will go wrong for the on-liners in my view.
As the burden of legislation and regulation comes to bear, they won’t be able to cope with the additional administration.
For example this week, someone I know wanted to buy through PB, and had to provide their ID.
He was asked to visit the LPE’s home with his ID where he was greeted by the LPE and all of their friends sat around doing not a right lot, but the whole episode seemed un-professional and just plain weird.
Imagine doing that medium term, what impression of the business did this intimidating environment leave?
Another example of excellent service…..not.
These things always come home to roost.
p.s. are all of the Lexperts LTD companies?, are they not employed?
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I think you are all missing the real story which is 5.5% of EXCHANGES not listings. If the figures are correct this means that Online are hoovering up a much bigger share of Listings than has previously been reported and/or their conversion rates have improved/are improving dramatically.
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In my view, and clearly others, there are difficult times ahead in the property market.
Let’s see how resilient Purplebricks and other Property Listers are when clients having paid their circa £1000 upfront (plus the conveniently less advertised extras)… find their property remains Unsold?
The USP of an attentive, diligent, professional High Street Estate Agent will become much more obvious when “The Get Rich Quick Onliners Only” who claim to be Estate Agents are found to be anything but an Estate Agent… because they banked their “Upfront Fee” months ago and are just focusing on catching the next £1000 Upfronter
I’m sure Purplebricks & Co are enjoying the lovely fuzzy feeling of just taking money upfront and rejoicing that their job is done… their clients however will WANT a result having paid their money.
Failure to deliver success has consequences… as the EasyListers will soon find out.
Even getrichquick investors must be able to see the cliff edge approaching.
Next year, Next year, Next year….. Zzzzzzzzzz.
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“Next year , Rodney , we will be millionaires !”
No supporting comment from Dom yet although i guess he is still smarting from his Twitter faux pas last night…….
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Ooh. Do tell.
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Just another of the many. Needless to say he deleted it… but denial is only the first stage to eventual acceptance of the inevitable.
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I’m sure there will be a screenshot somewhere !
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There might be…
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TV ads backed up with reviews.
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Well there you go 100% year on year revenue growth, on target to meet all Hardmans forecasts projections and now Number 1 in the country.
Australia ahead of schedule and due to break even Nov 2018 and US charging ahead.
What a great 12 months for PB.
It really is time you all stopped burying your heads in the sand and realising times are changing.
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Why all the PB ********? This isn’t about PurpleBricks, Sir – why spin it in that direction?
They are simply one cog in a gearset that runs within a massive machine.
Instead of you worrying about us burying our heads, I will once again implore you to go take yours for a well-overdue 5h!te before it goes Ultra-Plinian.
That would be very messy indeed.
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Now what’s that word I’m trying to find? Oh yes, profit! When fully audited accounts are available which show a profit anywhere near these ‘projections’, then I’ll consider times are a changing. Until then, forget it.
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And it has to repay all the money spent so far …. how many £m’s?
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Err 5.5% is actually a fall of 8.33% since May 2017
“but according to City analyst William Packer this morning, the share of listings on Rightmove is larger, at 6%”
and then of course there was this prediction of 40-50% market share by next year
http://www.telegraph.co.uk/finance/property/house-prices/10832640/Would-you-pay-12000-to-sell-your-house-or-500.html
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