Purple Zombenomics

Well, here we are again: Purplebricks, the property world’s perennial undead, back in the headlines with a £37.8 million loss and the now-familiar whiff of existential jeopardy. The Strike takeover – if we can call it that, given the princely sum of £1 that changed hands – was supposed to inject new life into the brand. Instead, it’s starting to look more like a blood transfusion for a patient who’s already flatlining.

The numbers are stark. Over £200 million of investor cash has been torched since Purplebricks’ inception, all in the service of subsidising home sales at a price point that’s never made commercial sense. The result? A business that’s always managed to find an investor or two to BELIEVE, with each new owner convinced they can succeed where others have failed.

There’s a certain gallows humour to the idea that Purplebricks’ main asset is its “brand awareness”. Yes, people have heard of it – but for all the wrong reasons. The Trustpilot score is middling, the reviews increasingly damning and the service, by all accounts, patchy at best. The only thing being disrupted here is the patience of vendors and the sanity of anyone unlucky enough to be caught in a chain involving a Purplebricks transaction.

Yet, for all the schadenfreude, it would be remiss not to acknowledge some impacts Purplebricks has had on the industry. On the positive side, it gave the more traditional agents a much-needed shove towards embracing technology. Suddenly, even the most dyed-in-the-wool corporates were forced to consider their digital offering. On the (very much more significant) negative, it hammered down commission rates, tarred hundreds of thousands of genuinely honest and hardworking people as chancing grifters and entrenched the idea that estate agency fees in the UK were a licence to print money – despite the reality that our fees are among the lowest in the developed world.

So, where next for this purple zombie? The shareholder statement is bullish but the fundamentals remain unchanged. It’s a business that needs to spend heavily on marketing just to tread water and every pound spent is another pound that needs to be stumped up by increasingly weary backers. Charles Dunstone and co may have deep pockets, but even they must be wondering how much longer they can keep the lights on.

The headline in The Negotiator – “Purplebricks at risk of going bust” – feels less like scaremongering and more like a statement of the bleeding obvious. Until the model changes, or the market does, that risk isn’t going anywhere. And for the rest of us? It’s another reminder that, in property as in life, you get what you pay for.