HomeBusinessMoneyMARKET REPORT: Purplebricks crumbles as it runs out of houses to sell

MARKET REPORT: Purplebricks crumbles as it runs out of houses to sell

Purplebricks’ share price crumbled after the online estate agent warned it was running out of houses to sell.

Trading in the six months to the end of October had been ‘challenging’ for the group as the number of homes it had been instructed to sell ‘slowed significantly’ following a boom during the pandemic.

Estate agents cashed in during Covid-19 as a cut to stamp duty, low mortgage rates and demand for green space from urban dwellers working from home sparked an explosion in the market.

Trading in the six months had been ‘challenging’ for Purplebricks as the number of homes it had been instructed to sell ‘slowed significantly’ following a boom during the pandemic

However, the buying frenzy has eaten into housing stock, which coupled with the end of the stamp duty holiday and the prospect of interest rate rises has left sellers more hesitant about putting up ‘For Sale’ signs.

The boom has also caused prices to skyrocket, pushing the average cost for a home in the UK above £250,000 for the first time last month, pricing out more first-time buyers. 

As a result of the lack of supply, Purplebricks expected to conduct 22,000 property sales in the period, a 38 per cent decline year-on-year. The shortfall was also expected to continue into 2022, with the company’s full-year profits now predicted to be below previous expectations.

Stock Watch – The Fulham Shore

MARKET REPORT: Purplebricks crumbles as it runs out of houses to sell

The Fulham Shore, owner of the Franco Manca pizza chain, was lifted after it paid off all of its pandemic support loans.

The firm recently repaid £8.5million, the final tranche of the £10.7million loan it took out last year as lockdown measures forced restaurants and other businesses to close in the UK.

It was accompanied by a trading update which saw the group’s restaurants continue to trade ahead of pre-pandemic levels as workers and tourists returned to its city-centre locations.

The shares jumped 6 per cent, or 1p to 17.75p.

‘Our service proposition remains strong and compelling, with properties selling quickly, but the reduced amount of stock coming to the market is proving challenging’, said Purplebricks chief executive Vic Darvey.

Analysts at Peel Hunt were also downbeat, saying the company’s performance was ‘weaker than expected’ and as a result, they predicted Purplebricks would deliver a full-year loss of £2.5million versus previous predictions of a £12million profit. The shares plunged 37.3 per cent, or 19.6p, to 33p following the update.

The FTSE 100 added 0.4 per cent, or 31.02 points, to 7279.91 while the FTSE 250 climbed 1.5 per cent, or 354.14 points, to 23,471.11.

A decision by the Bank of England to keep its interest rate at 0.1 per cent appeared to soothe the market’s nerves over imminent rate rises, however, it was bad news for banking stocks as the ultra-low rates will continue to eat into their profit margins.

Lloyds fell 4.5 per cent, or 2.25p, at 48.25p while Natwest dropped 5.6 per cent, or 12.6p, to 212.3p, Barclays fell 4 per cent, or 8.02p, to 191.5p and HSBC sank 2.5 per cent, or 11p, to 433.5p.

Housebuilders, meanwhile, were boosted by the decision, with low interest rates likely to prop up demand for mortgages.

Blue-chip Barratt Developments was up 1.9 per cent, or 12.6p, at 666.2p while Taylor Wimpey rose 2.2 per cent, or 3.4p to 156.3p and Persimmon added 1.8 per cent, or 47p, to 2712p.

Superdry slipped 7.4 per cent, or 22p, to 275p as its wholesale business was hit by supply chain disruption. 

It said despatches were four to six weeks behind schedule, potentially presenting major problems ahead of the crucial Christmas trading season.

Investors were sweet on mid-cap ingredients maker Tate & Lyle, which jumped 4.9 per cent, or 32p, to 681p following a strong set of half-year results.

For the six months to the end of September, pre-tax profits climbed 20 per cent to £85million while revenues rose 19 per cent to £656million.

The figures were boosted by double-digit revenue growth in the company’s food & beverage division thanks to demand for healthier foods from consumers.

Medical tech firm Smith & Nephew warned its full-year performance will be at the low end of guidance as its orthopaedics business was hit by supply constraints and Covid-19’s Delta variant.

In the three months to October 2, revenues from the division fell 0.7 per cent to £377million, but overall revenues across the firm rose 5.5 per cent to £939million thanks to growth in its sports medicine and wound management businesses. Shares climbed 2.6 per cent, or 33p to 1325.5p.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Stay Connected
Must Read
You might also like


Please enter your comment!
Please enter your name here