Purplebricks low-cost model not working in Australia: First National CEO

Purplebricks, an online property platform that claims to have a unique low-cost model, will likely replicate its losses revealed in its home country, Britain, according to a leading Australian property industry executive. 

"Since its August 2016 launch, when more than a quarter of a million properties were listed for sale with Australian agents, Purplebricks has sold little more than 150 properties and currently has just 310 properties listed," said First National Real Estate chief executive Ray Ellis.

“By any measure, that represents a rejection of its ‘low cost’ model and a market share smaller than 0.1 percent,’ he added.

Purplebricks says it is the third biggest agent in Britain by client instructions with a market share of 5 percent. 

The ABC’, however, reported in September 2016 that just one in four UK customers give it a rating of one star out of five on its Facebook page. 

In contrast, First National says 82 percent of its member agents in Australia achieve 5-star reviews.

“Australians have an entirely different view of property ownership and are focused on building wealth through property investment. They understand the extra value that a professional agent brings to the marketing, negotiation and sale of property, and therefore continue to choose agents to maximise their sale price," said Ellis.

In 2016, Canstar Blue researched customer experiences with Australia’s major real real estate brands and announced that First National Real Estate was number one with the most satisfied customers.

It was the only brand to achieve 5 star ratings, doing so in six separate categories, one of which incorporated value for money.

Purplebricks, which opened its Sydney office late in 2016 after securing a toehold in Victorial and Queensland, is being led by Ryan Dinsdale in Australia, a former marketing director of Virgin Money. It recently selected law firm lawlab as a preferred conveyancing partner in Australia.

The firm made its market debut in London in December 2015 with a valuation of £240 million after being founded only in 2012 by brothers Michael and Kenny Bruce. However, it booked a loss of £12 million in the year to April 30, up from £5.4 million in 2015.

Purplebricks chief executive officer Michael Bruce, however, reckons Australia's "infatuation" with real estate but dislike of the way traditional estate agents operate will fuel the success of his company.