Purplebricks Share Discussion Threads

[lefrene] 10/7/2017 16:27

Andy, "Amazon to sell cars", quick how do we go short on car retail premises? :¬)

Cars make sense online since they are of a known standardised quality, and the credit is usually not so stringent and is in place. I bet Amazon has an eye to the car credit market. However houses are much trickier, the web makes a good initial shop window, but closing the deal is another matter.

Plainly the £1034 a sale is coming from serviced clients so Purplebricks is working for some people, will it continue to grow fast enough to justify the current market cap? If it works out well, how easy is it for somebody else to copy?

[andy] 10/7/2017 16:13

Pete,

I agree, online is clearly here to stay and sadly it is killing the high street we knew and loved, so naturally house sales will go online, and there are rumours Amazon are looking to sell cars online too!

[buywell3] 10/7/2017 15:56

Historical average house price to earnings were 3.6 times

The buy to let buyers now owning circa 25% of property have distorted values

The market is now in bubble land



We have a possible 50% correction coming ... 33.3% minimum in my view

[cheshire pete] 10/7/2017 14:00

Hi Andy,
I agree that many, myself included, in the 40+ (say) bracket will prefer to carry on using a traditional estate agent and value their local knowledge and expertise. However many of those under 40 now seem to do virtually everything on line from banking to buying clothes, and buying or selling a house on line is seen as another 'quick fix'.
Apart from the UK demographics, maybe the online model is attractive in Australia and California where travel distance involved to view properties may be a factor.

[lefrene] 10/7/2017 13:26

Interesting what the passage of time does. The comment above about lenders now "only" lending at 4 to 4.5 times annual salary. That was the dizzy level reached in 1988 just before that slump hit, triggered by the ending of multiple mortgage tax relief on a single property on 31/07/88. 'Normal' ratios were 2 to 2.5 times salary, before the cretinous Gordon Brown ("no more boom and bust"), orchestrated the runaway funny money boom.

I guess that a modern danger is the number of exposed buy-to-let owners, who risk finding themselves unable to jack up the rent enough, to cover the mortgage if interest rates begin to rise.

Seems to me that people want an agent to hold their hand, or else Ebay would be a more popular way of shifting bricks and mortar.

With Purple Bricks it would seem a straight forward matter of following the numbers, and seeing what they emphasise and what they leave out. The current valuation (almost £1.2 billion!), to me seems to fully reflect current business and a very good dollop of expectations for the future.

[rackers1] 10/7/2017 13:20

hows your short doing muppet chops ?

[lydnem] 10/7/2017 13:05

Im amazed people thinking the Buy note in the IC is good news!!

[andy] 10/7/2017 12:58

ddav,

Have you read that article you quoted?


"Between 2001 and 2011 the percentage of those who own their home dipped from 69 per cent to 64 per cent, the first fall recorded in nearly 100 years".

That was FROM 2001 TO 2011, it's been falling since too!

How many years is that?



"Matthew Pointon, property economist with Capital Economics, said the rate of home ownership in the UK had been dropping for the past seven years because property prices were overvalued by most measures".

That agrees with what I have been saying here!



He added: “Although we expect owner-occupation will remain the most popular tenure, the homeownership rate is likely to continue to decline over the next few years.”

That also agrees with what I am saying here!


Thanks for posting that, it's nice to read some confirmation of what I perceive is the state of the housing market, by the 'experts'.

[andy] 10/7/2017 12:53

Pete,

I agree estate agency is changing, the internet saw to that, and yes first mover advantage MAY prove to be advantageous, but it may not.

I still feel there is a role to play for a hands on local estate agent that knows his area well, and is connected in the community. He may have to adopt a fixed fee system too, and if he does, PURP loses its competitive advantage.

How quickly can the competition adapt and catch up? That is the key question IMO.

What would happen if Amazon starts a house selling service, for example?

[cheshire pete] 10/7/2017 11:43

Andy,
The market doesn't appear to agree with your pessimistic take on the IC buy at 417p. Now at 440p. Estate agency is changing and first mover advantage may prove to be significant.

[rogthepodge] 10/7/2017 11:23

first mover advantage!

turnover is already depressed

not much on agents books now

[andy] 10/7/2017 11:10

Rog,

I take your point but if lenders are only lending at 4 - 4.5 earnings, and the average house is 6 times earnings, there is a gap, and that is my point re affordability.

We do seem close to a rate rise, although I suspect the US may have to reverse sooner rather than later, plus .25% won't make too much of a difference, but it may signal the end of lower rates, and could be a catalyst.

I agree re turnover, hence my comments about the market drying up, which it does in the first stages of a correction. At that point if PURP#'s up front fee strategy is working, I would expect some of the competition to adopt it, or a similar model.

[ddav] 10/7/2017 11:06

100 years of increases in ownership Andy!!



I hope prices do come down --- far too high for first time buyers!

Consider this closed.

[rogthepodge] 10/7/2017 11:00

Andy

earnings to price is only one function of house prices

another big one is interest rates! what were interest rates when e/p levels were depressed before?

a threat to the market is rising interest rates, but it is still
TURNOVER and not price levels that is critical to PURP's profits

[andy] 10/7/2017 10:46

ddav,

Well perhaps you could point out when these corrections occurred, because on an earnings to price ratio I think houses are more expensive than they have ever been.

And high rents are restricting what people can save towards a deposit, we are at the lowest levels of owner occupation since the mid 60's!

[ddav] 10/7/2017 10:46

Andy,


I suspect they will all fight for their lives, and do whatever they have to, and that will probably mean they reduce their fee structure, or change and adopt the PURP model, or something similar.

HE WHO BUILDS THE BETTER MOUSETRAP WILL BE THE WINNER!!!

[ddav] 10/7/2017 10:40

Andy ---

There have been corrections up and down all along however overall gains have caused them to be somewhat insignificant. The £6000.00 chargees I am being quoted is double the amount I paid for my first house in 1966!!

[andy] 10/7/2017 10:35

ddav,

I think the advance fee may become the sticking point, if houses become hard to shift.

If you're not sure of a sale why pay upfront instead of waiting to see if your property sells?

Do you honestly think the competition is just going to sit there and wait for PURP to run them out of business?

I suspect they will all fight for their lives, and do whatever they have to, and that will probably mean they reduce their fee structure, or change and adopt the PURP model, or something similar.

[andy] 10/7/2017 10:31

ddav,

House prices last corrected in the late 80's early 90's, so your maths or memory isn't so good.

And the longer the positive run, the more likely a correction will occur, markets always correct sooner or later.

At the current level of prices, average people are struggling to get on the property ladder, due to large deposits being required, and a high earnings to price ratio, and the government have just tinkered with the BTL tax regime, so I would suggest all the ingredients are there for a correction.

So yes, I do think there is a danger the market will "dry up", an interest rate rise or two may well be the catalyst for that, we shall see.

[prewar] 10/7/2017 10:30

White socks and slip on shoes don't come cheap ddav!

They also have expensive bricks and mortar overheads to pay. I'm sure they do do something but the cost isn't correlated to the price of the property and that's why they'll fail in the long run.

[ddav] 10/7/2017 10:13

I recently had my house valued --- I was told that charges would be around £6000.00
by a local estate agent !!!!! What do they do for their money??????

I would rather pay two lots of £800 and more --- no probs. selling at the right price!!

[ddav] 10/7/2017 10:00

Purp is at the forefront and is changing the way of estate agents.

Over the last 30 years we have not seen a significant correction in housing prices!

Some may copy Purp but critical mass will ensure it's succuss! IMHO!

DRY UP HOUSING MARKET ? ---- oh dear!

[andy] 10/7/2017 09:50

ddav,

Not if prices correct, the market dries up first!

And then you have the issue of will cash poor but asset rich people prefer to pay in advance for a service that may not result in a sale, rather than pay after the sale, albeit at a higher price?

And you're ignoring the very real risk that competitors don't emulate PURP's business model, which two have already done.

One traditional agent in my area has changed to a fixed fee in advance approach at £750, for example.

[ddav] 10/7/2017 09:39

Property price movement --- so what -- more sellers and more buyers.

Purp still collects!!!!