Competition always welcome says Reiwa as Purplebricks Australia calls it quits

Competition always welcome says Reiwa as Purplebricks Australia calls it quits

FOLLOWING the announcement that real estate ‘disruptor’ Purplebricks would leave Australia, Reiwa chief executive Neville Pozzi said competition was welcome as long as the service provided was compliant with the regulations applying to real estate agents.

“Our view was that Purplebricks were misleading and deceptive in their marketing,” he said.

The fixed-fee agency entered Australia in 2016, when the eastern states markets in particular were riding a high.

It met with a negative response from the real estate industry and was regularly under scrutiny, being reported to fair trading bodies in several states.

Mr Pozzi said it was not surprising Purplebricks was leaving Australia as their business model was unsustainable and was based on the British model where the market was totally different.

“Its failure was a combination of a number of factors and in particular the business model that relied on significant transactions to make it a viable career for employees,” he said.

“The negative feedback from customers and the slowing real estate market all combined to make the business model unviable.”

In a trading update Purplebricks said during the two and a half years it had been operating in Australia, market conditions had become increasingly challenging and, combined with some execution errors, this had resulted in the business not delivering the progress the Board expected.

Chairman Paul Pindar blamed “geographic expansion” that was “too rapid”.

“As a result the quality of execution has suffered,” he said as he apologised to shareholders for disappointing performance over the last year.

It will continue to service current Australian clients, but would not take on new business.

The company also announced it would be reviewing its US operations to see whether it could run a “materially scaled back” business, and that founder and chief executive Michael Bruce had stepped down.

It is also facing challenges in Britain, where property market conditions have deteriorated following uncertainty over Brexit.

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