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Purplebricks Share Price Has Fallen 77.8% in the Past 12 Months. What’s Next?

Simon Mugo trader
Updated 31 Jan 2022

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Key points:

  • The Purplebricks share price has fallen 77.8% in 12 months.
  • The decline was driven by the tight supply of homes on the market.
  • However, the company remains optimistic about its prospects

The Purplebricks Group PLC (LON: PURP) share price has fallen 77.8% in the past 12 months as the booming property market resulted in a supply gap as demand for homes far outweighed the available supply.

The real estate listing agent’s shares fell drastically in November after announcing that the number of homes it has been requested to sell had fallen 38%.

The company released its half-year trading r results earlier today. It made a £12.9 million pretax loss in the six months to the end of October compared to the £4.3 mln profit generated in a similar period in 2020.

Also Read: Five Best Property Stocks in Singapore.

Purplebricsks revealed that demand continues to outweigh supply as potential home sellers hold off putting their homes on the market due to the prospect of rising interest rates and the low supply compared to demand.

Potential sellers are afraid that they might not find alternative homes after selling their houses due to the UK’s current low supply.

However, Purplebricks reported that the revenue made on each listing had risen 15% to £1,642 driven by the current market dynamics.

The company attributed its poor performance to implementing a strategic change in its operating model at the worst time possible as the UK property market was dealing with significant shocks.

The end of the stamp duty holiday also hurt the company as investors would now have to pay stamp duty on any home purchases at the regular rate starting on 1 October 2021.

However, Purplebricks is optimistic about its prospects this year amid an improving supply of homes on the markets and as buyers adjust to the rising rates and push forward with their home purchases.

The real estate listing company also revealed that the provisions for the claims made by clients in its letting business would amount to £3.6 mln compared to the previous estimate of £2 mln to £9 mln.

Investors appreciated today’s results, as evidenced by the slight rally in Purplebricks share price, but the company still has a long way to go before recouping last year’s massive losses.

It is not yet clear whether the UK property market shall retain significant demand in the future as the Bank of England continues raising rates over time.

*This is not investment advice. Always do your due diligence before making investment decisions.

Purplebricks share price.

IG chart of Purplebricks share price 31-01-2022
Source: IG

Purplebricks share price has fallen 77.78% in the past 12 months. So, what’s next for the firm?

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading