Purplebricks predicts that it will have 10% share of the property sales market within two years, despite mass job cuts currently taking place at the company.
Speaking as part of the latest episode of City AM‘s interview series, the chief executive of Purplebricks opened up about the online estate agency’s plans to become profitable and its expansion strategy, despite the fact that it is currently in the process of laying off staff.
Well-placed sources have informed EYE that up to 15% of its workforce could lose their jobs.
Purplebricks currently employs 580 members of staff, and it is our understanding that the job cuts will see around 90 members of staff lose their jobs, with others already actively looking for new positions elsewhere in the sector.
The online estate agency continues to try and disrupt the housing market after announcing almost a year a go that customers could sell their homes for free as part of an operating model that replicates the one previously offered by Strike, which acquired Purplebricks 15 months ago for £1 backed by Freston Ventures.
But EYE understands that Strike has found the Purplebricks deal to be worse than expected, while there are growing concerns about the macro environment since Labour came to power, with increasing uncertainly in the economy and a Budget announcement that looks set to be bleak for businesses.
Purplebricks, which stopped trading on AIM in June of this year, has been trying to revive its fortunes under the new operating model, and Sam Mitchell reflected on this.
During the interview Mitchell claimed that the businesses is “not a million miles away” of achieving significant growth in market share.
Watch the interview now:
While the sales market offers Purplebricks room for growth, Mitchell, in the interview, explains that he believes the rental market is “completely broken” and that spells bad news for first-time buyers unless they can rely on the bank of mum and dad.
Mitchell added even that method of getting on the housing ladder is “becoming much harder”.
The CEO also revealed how he bought his first house after joining two friends in each getting £10,000 loans to buy cars and a three-bedroom house in London in their early 20s. Mitchell added that the house, which he sold just before the 2008 financial crisis, is probably worth £1m now and that the idea of someone else doing that now is “for the birds”.
The Purplebricks CEO said: “It’s very clear that the rental market is completely broken, making it a complete disaster for first-time buyers unless you can rely on the bank of mum and dad which is obviously becoming much harder.”
He added: “If I rewind 20 years to when I was just starting out in the industry I went out with two friends and we all got £10,000 loans each and we would buy cars and we went and bought a three-bedroom house in London by Tower Bridge for £300,000.
“The thought that you could possibly do that now in your early 20s is for the birds. That house is probably worth £1m now.”
