Purplebricks has seen a drop in new instructions in the last six months and says EBITDA will be below the previously issued guidance.

The listed online estate agent expects to report a reduction in instructions for the six-month period ended 31st October to around 22,000, which is 23% below the comparative period last year (35,387). 

It blamed challenging market conditions on the drop, with a discrepancy in supply and demand.

“After an exceptionally strong period for the UK housing market in FY2021, buoyed by the stamp duty holiday, the period has been more challenging,” it said. 

“New instructions have slowed significantly in recent months, given continued strong demand across the housing market is not being met by sufficient supply of instructions.”

The company’s move to a new operating model, with agents fully employed by the business rather than independently, saw its cash position drop to approximately £58 million, compared with £75.8m at the end of October 2020. 

More than 95% of its new sales team is now in position as it also moves to a new pricing structure.

“We are confident that our transformed business model will partially mitigate the impact of market conditions on instruction levels,” the statement continued. “This transformation is yielding positive results in terms of growth in ARPI and we are starting to see progress in our market share aspirations and are well-positioned to grow following the completion of our transition to a fully employed model in the second half.”

Attention to detail: How Steve Jobs pulled Apple back from brink

Vic Darvey, CEO, commented: “Following a stronger period for instructions last year, supply in the market has fallen as we slowly adjust to a below normal level of activity following a period of successive lockdowns and the end of the stamp duty holiday. 

“Our service proposition remains strong and compelling, with properties selling quickly, but the reduced amount of stock coming to the market is proving challenging.

“Against this more challenging backdrop, the team is continuing to execute on our transition to the new operating model. We are encouraged by the early results we are seeing on the ground and whilst they are not yet reflected in the overall group performance, we are confident in the strategy and that we have developed a strong platform for growth as activity levels pick-up. 

“We are committed to our mission of achieving 10% market share by being the go-to-place to buy, sell or let your home.”