After two-and-a-half years, low-fee real estate agency Purplebricks are exiting Australia citing “challenging market conditions” and “execution errors” in its rapid business expansion.
The online real estate agency launched into the Australian market as a “disruptor” to the traditional real estate model in late 2016, but have since lost millions while operating on Australian shores.
Amid Australia's housing slowdown, the UK-based group upped its capped commission rate to $8800 in October last year.
But in its latest update, Purplebricks finally called time, saying that “prospective returns from Australia” were “not sufficient to justify continued investment”.
“During the two and a half years that Purplebricks has been operating in Australia, market conditions have become increasingly challenging.”
“This, combined with some execution errors, has resulted in the business not delivering the progress the Board expected.”
“The business (in Australia) has been put into an orderly run down with immediate effect, pending closure. The business remains committed to our current customers.”
The group, which was founded in the UK and has operations in Canada and the US, also announced its founder and chief executive Michael Bruce would step down.
Bruce, who started the company in 2012, will be replaced by chief operating officer Vic Darvey.
“Importantly, we are very conscious that the group's performance has been disappointing over the last 12 months and we sincerely apologise to shareholders for that,” Purplebricks chairman Paul Pindar said.
“With hindsight, our rate of geographic expansion was too rapid and as a result the quality of execution has suffered.
“We have also made sub-optimal decisions in allocating capital. We will learn from these errors and will not make them again.”
The London-listed group will post its results on 3 July for the year ended 30 April 2019.
