After the rollercoaster of the last two years, I can see we are heading for another challenging year across the industry in 2022. There’s certainly plenty of change on the horizon, as pandemic uncertainty continues, leading to staff shortages, low stock levels, changing business models and many agents consolidating or exiting the business completely. Here are some of my predictions for 2022.
- The strong will get stronger
The industry has started 2022 with a bang, but with a massive upsurge in demand not matched by supply. We’re seeing record numbers of valuations but unless these translate into sales, the low stock levels will cause a real headache for everyone. The discounters will continue to get weaker and lose even more money, though the top three agencies on market share will grow even stronger. New starts will find it much harder to get a foothold if low stock levels remain. This will lead to market consolidation, branch closures and agencies trying new models, including continuing to work from home.
- Purplebricks will hit a brick wall
Purplebricks are in a strategic mess and don’t have a strong EA or Lettings leadership to steer them out of a freefall of significant mistakes by senior management. I predict that shareholders will lose faith in this business and take a hit, with shares now down to 23.3p, as I write.
The business is facing a further bill for their well-documented lettings’ issues, which they admit could cost them up to £9m, although it’s been reported in the Telegraph it could be up to £30m. This is in addition to their legal challenge from former sales agents since moving to fully-employed status. When the public search on Purplebricks, they will see these negative stories which must surely cause them concern when considering which agent to use.
Could we be seeing the death knell of Purplebricks? I think so. They will have to live within their means, which will require a reduction in headcount as they focus on their profitable locations and my belief is they will have to up their fees substantially or accept the inevitable end! They certainly don’t have much of a business to sell and it will be interesting to see what their half yearly accounts show – when they eventually decide to publish.
- Other internet agents will continue to burn cash
Yopa has apparently had its begging bowl out again, which isn’t surprising as it made a £5.8m loss in 2020, on the back of a £17.8m loss the previous year. Why won’t investors learn? They only have to look at the way in which Purplebricks has burnt through millions of pounds. Yet they continue to throw good money after bad.
It’s the same over at Strike, the ‘No’ Fee Agent with ‘No Prospect of making a profit’, which has only filed small company accounts to March 2021, so there is no income statement shown. There’s still sufficient information to see its losses in its P&L reserve account have increased from £49.5m to £54.2m. Shareholders have sunk a further £10.7m into the business. The failure of these models will, in my opinion, continue and I predict we’re now seeing the beginning of the end for some of them.
Paul Smith is chief executive officer of Spicerhaart. You can read more of his predictions for the year ahead on EYE tomorrow.
Property Industry Eye has offered Purplebricks, Strike and Yopa an opportunity to respond.
Comments (9)
So many people having a dig at purple bricks for being different, for seeing the market needed something new and fresh then doing it.
i know they put a lot of noses out of joint by taking your work, but if you weren’t so lazy, they wouldn’t have had to.
So rather than sit and bash them, look in the mirror, own your own failures, come up with a plan to get the customers they are getting back to your way of working, if they don’t come back, doesn’t that tell you customers want something different to what you offer?
“So many people having a dig at purple bricks for being different, for seeing the market needed something new and fresh then doing it.”
NOBODY is “having a dig” at Purplebricks for the reasons you have stated. Not one single person. All I see being stated is the patently obvious.
Purplebricks built a straw house on foundations of quicksand – they spouted lies, damned lies and statistics that the sector of the public they targeted to attract wanted to hear and didn’t question.
The ’emperor’s new clothes’ scenario worked – for a while. Then all of a sudden, people began to see his winky. And it wasn’t an impressive one.
Let’s just say it couldn’t stand up to close inspection.
And what points down, goes down.
Does PS ever write anything new? same online agent churned opinion and this from PS who may want to look in house before spurting the same old blurb ……… yawn, time to move on PS
Paul makes some interesting and valid points. The online agency scene is literally eating itself. When price is really the only factor for these models have going for them, it is a self defeating tactic to see who can be ‘the last man standing’….but on a battlefield laid waste. Having stupid names doesn’t help to be honest as this trend requires constant and massive investment in brand awareness at a time when the populace has the attention span of a cat on crack. The trend of self employed and franchised options continues to grow resulting in often poor recruitment outcomes with the obvious impact on vendors and buyers and i counted six emails offering such in the last week or so. Everyone is piling on trying to create scale to cover increasing costs or a whiff of profit from slim pickings. Purple bricks have renamed in Canada quicker than the Royal family removed Andy from his titles but at the end of the day, you can call yourself what you like but if it quacks, it’s still a duck.
I couldn’t agree more with PS’s comments, any investor sinking money into businesses which don’t charge a fee for their services clearly have more money than sense. Bring on 2022!
Just checking if arsed is a word picked up by the naughty word filter.
oh come on… it wasn’t picked up and now it is.
Honestly… are we? 4r53d that is?
Purplepricks has always considered themselves exempt from law.
Allegedly, right from the start, Ombudsman registration wasn’t correct and portal juggling continues. Now their PR machine is in defensive mode.
The action by former employees over IR35 will revolve around ‘control’. I have spoken with ex-LPEs and it seems control was total.
The failure to serve prescribed information was described as an administrative error & process issue where a piece of paper wasn’t provided. This document is the subject of a Court of Appeal hearing today and should the appeal fail, will have a profound effect on the industry.
Either a deposit is protected or it is not, there is little mitigation and judges seldom rule, ‘oh well, it was only an admin error’.
They are reaping what they sow and it difficult to have any sympathy toward a business hell bent on the destruction of others.
“I can see we are heading for another challenging year across the industry in 2022”
How many last minute redundancies you planning to make this year then?
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