Low-cost estate agents Purplebricks has begun an assault on the country's biggest and most expensive housing market after recruiting 20 estate agents to its new Sydney and Central Coast business.
London-listed Purplebricks launched in Melbourne and south-east Queensland in September with 50 "local property experts" charging a $4500 flat fee and offering 24/7 service via an online platform.
In Sydney, Purplebricks will launch on Monday with a $5500 fixed-fee and an additional $1100 charge for homes that go to auction. They claim to be able save sellers more than $15,000 off the cost of using a traditional estate agent.
This savings figure is based on someone selling a $822,000 home (the mean NSW dwelling price, according to the Australian Bureau of Statistics) and an agent charging them a 2.2 per cent commission and $2500 in marketing costs.
Purplebricks co-founder and CEO Michael Bruce told The Australian Financial Review its Australian business was growing faster than any previous regional expansion in the UK.
"We've got 20 local property experts on board [in NSW] and will grow from there. I have personally met everyone of them. The Sydney market is really important for us," he said.
"Agents are approaching us. We [are] getting calls from agents from McGrath, LJ Hooker and Ray White interested in our model so we will keep on growing." Purplebricks will next look to expand into Perth and Adelaide.
The Financial Review called the arrival of Purplebricks in Australia the real estate industry's "Uber moment", referring to the potential for it to disrupt the traditional way homes are sold in the country and steal market share from the major estate agents.
Critics – mostly rival estate agents – argue Purplebricks' low-cost model offers poor customer service, a charge the company firmly rejects.
Mr Bruce said Purplebricks was playing a major role in changing the way real estate is sold in the UK and would do the same in Australia.
He pointed out that its major UK rivals were struggling, with the share price of Countrywide, the UK's biggest estate agents, tumbling last year and high-street rivals Foxtons this month issuing a profit warning.
In Australia, the country's only listed real estate group, McGrath, has endured a torrid time since debuting on the ASX just over a year ago, with its share price down nearly 60 per cent from its $2.10 offer price.
"We're not the sole reason why many estate agents in the UK are struggling, but when you're selling as much property as Foxtons then clearly, we are having an impact," Mr Bruce said.
In the UK, Purplebricks will soon have more than 400 local property experts and will sell between £6 billion and £7 billion ($11.4 billion) worth of property in 2017.
The company, founded in 2014 and now the UK's third biggest estate agency with a market value of about $600 million, reported its maiden profits in December for the six months to October 2016.
The Australian business contributed £400,000 to total reported interim revenue of £18.7 million over the period and generated just over $1 million in real estate fees in the first seven weeks of operation.
The Australian Purplebricks website shows more than 430 properties up for sale or sold since launching in September.
