This morning Purplebricks announced that together with Axel Springer, it is jointly acquiring 25.9% of a German online estate agency, Homeday at a cost of £22.3m.

The move signals Purplebricks’ entry into mainland Europe’s property market and Purplebricks and Axel Springer, via their new venture NewCo, have an option to acquire a further 28.5% of Homeday in August next year.

Homeday, launched in 2015, Homeday is based in Berlin, uses sub-contractor agents, and last year made revenue of  €3.5m and a loss of €3.2m. It projects to break even in 2021.

However, rather than spending even more money, surely it might be more sensible for Axel Springer, the German digital publishing giant, to  be questioning the wisdom of its investment in Purplebricks right now.

A hybrid estate agency may seem like a good fit for a company which has its aspirational sights set on being the ‘most successful digital publisher worldwide’.

But having invested £125m in Purplebricks in March, of which £100m was in shares worth £3.60 each, and purchasing a further 3m shares at a cost of £3.07 in July, taking its stake to 12.5%, it must be praying for an upturn in Purplebricks’ share value from its current £2.20, as I write.

By my calculations, that’s over £41m wiped off its investment in just six months.

Given that the share price had previously risen to just over £5, surely investors will be starting to get nervous about Purplebricks’ ambitions, particularly as it struggles to make inroads into the US and Australian markets.

Clearly investors need to be in it for the long haul – but after four years, Purplebricks are no nearer to making money and giving shareholders a return on their investment.

If I were an investor, I’d be getting jittery and starting to question whether the Purplebricks model really is fit for purpose.

After all, when Countrywide’s shares tumbled by half, shareholders were very quickly calling for the CEO’s resignation – and succeeded in their aim. Should heads now roll at Purplebricks?

At the same time, the Daily Mail & General Trust must be ruing the day it decided to invest in Yopa, pumping in another £20m in August, bringing its total to £75m, while LSL and Savills have also poured in millions.

Meanwhile Emoov, which merged with Tepilo in May, is now talking of floating on the Stock Exchange. Good luck with that! 

Connells closed its online agency Hatched in September, saying the ‘online-only/hybrid business model is fundamentally flawed’.

It’s not just the hybrids or online agents that are bearing the brunt of a stagnant housing market, extortionate advertising costs and sizeable competition.

A quick look through the results of the big agency groups shows all is not well.

Connells said at the end of 2016 it had ‘nearly 600 branches’. A year later, it said it had ‘expanded further’ to 591 branches!

It’s hard to tell whether its branch count has gone down or stayed the same; however, as it is owned by Skipton Building Society, a mutual organisation, members will inevitably be intrigued as to where its future growth is coming from.

Will it float? Or even sell?

LSL reported it had closed eight branches in the second half of 2017; profits plunged by half in the first six months of this year to £6.4m.

As for Countrywide, its shares are at rock bottom, just 11p as I write, with the firm bringing in an expert in restructuring and debt finance as a new director. What does that tell you about the future of Countrywide? In terms of branch closures, it’s only a matter of time before these surface.

Even Foxtons plunged £2.5m into the red in the first six months of this year, compared with a £3.8m profit for the same period in 2017.

Now it’s closing its iconic flagship branch in Park Lane.

The next six months aren’t looking any better, with pundits predicting a weak autumn for the housing market.

Sooner or later, shareholders of all these businesses will want a return. There could be fireworks ahead!

Why High Street is better than back street

Why on earth would the US-owned Keller Williams agency suggest that UK agents should ditch the high street in favour of serviced offices to save costs?

A central presence is one of the cheapest forms of marketing – even cheaper in many places than billboards – now that commercial landlords have had to reduce their high street rents in order to hang on to town centre businesses.

Agents don’t sit around twiddling their thumbs waiting for people to come in.

They use the high street as a base to conduct the same activities that you would if you were hidden away in some modern office block – out of sight and out of mind.

As for making an impression on your customers, being in a serviced office will hardly inspire confidence, nor is it great for those who need to use public transport to get to you.

If you do choose to rent a serviced office for your business, or even be based at home, make sure your pockets are deep.

Getting your name out there when the market is saturated will cost you serious money. You need eyeballs on your business – and repeatedly so. As the hybrid agents have found, marketing doesn’t come cheap.