Purplebricks Australia CEO Neil Tavender has said the estate agency is not leaving Australia, after a new report surfaced warning that poor global management has meant the network’s Australian and US businesses will be forced to close.
Investment bank Berenberg said the flat-fee network had flown “too close to the sun” in the UK market and might have to exit Australia and the US just to survive. At the same time, the bank cut Purplebricks’ share price target to 80p from £4.70 and switched its rating from “buy” to “sell”.
The Australian Financial Review reported: “Online estate agent Purplebricks has hit back at warnings it may have to abandon its struggling Australian operation, saying it is still looking to boost the business Down Under.”
Australian CEO Neil Tavender confirmed that Purplebricks is committed to the Australian market.
“This year, we have boosted our agent numbers by 32 and expanded to new regions, bringing our proposition to more Australians,” he told REB.
“While the local market has softened, the fixed fee model continues to be an attractive proposition for sellers wanting to maximise their returns.”
The group’s global COO, Vic Darvey, rejected Berenberg’s analysis, saying that Purplebricks’ Australian transformation over the last six months is bearing fruit.
“We are pleased with the recent growth in instructions and sales,” he told the AFR.
“Recently, we have boosted our agent numbers and expanded to new regions, bringing our proposition to more Australians.”
After planting its flag in Australia in 2016, Purplebricks has been aggressive in its drive to grow market share here, but it hasn’t all gone according to plan.
In September last year, it announced a new service offering, including an all-inclusive fee of $8,800 paid in two instalments, after a run of poor sales performances.
At the time, Mr Tavender said the changes were a natural evolution of the business.
“In recent weeks, co-founder Kenny Bruce and our leadership team have travelled the country to speak with all of our agents and many of our customers. We are excited by the ambition and commitment of our people, but as is the case with any new and disruptive business, we are always learning and looking for ways to continuously strengthen our offer.”
Earlier this year, it unveiled a Barry Du Bois-led ad campaign attacking the current “commission collecting” model, which it said has not changed for 30 years — and is only in place to benefit agents.
But it has had its share of criticism too.
Century 21 owner and chairman Charles Tarbey said that Purplebricks is “completely wrong” about its view of flat fees. He said that Purplebricks’ assertion that fees have not changed for 30 years is inaccurate.
“What they fail to understand is that, in the past, it was a flat fee administered by institutes and governments, and we didn’t have a choice,” Mr Tarbey said.
“And in many cases today, that fee would be higher than what the agents have been negotiating for themselves in the past few years.”