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Amazon could enter housing market and threaten Purplebricks’ US expansion plan, says UK analyst

ON THE MARKET

Amazon could be about to enter the housing market, City analyst Anthony Codling has said.

In a note to investors yesterday evening, Codling, of Jefferies, said that Amazon had placed a “hire realtor’ placeholder in its home and business services section – a move that could signal a threat to Purplebricks’ imminent entry into the American real estate market.

Codling said: “Purplebricks is big, but Amazon is a little big bigger.

“Whilst we remain yet to be convinced that Purplebricks’ business model is proven, we admire the pace of its growth and the scale of its influence. It is definitely a brand which, in our view, punches above its own weight.

“However, it is not as heavyweight as Amazon and we doubt that, even in the face of its many five star Trustpilot reviews, Amazon is a more trusted brand than Purplebricks.”

Questioning whether Californian dreams could turn into nightmares, Codling said: “It appears to us that Amazon may be looking to enter the real estate business. This would in our view add a significant level of risk to Purplebricks’ US expansion plan.

“Amazon has changed the way this analyst shops for most things and housing could be another product purchased through a trusted brand.”

Codling also said that on this side of the Atlantic, the Taylor Review on modern work practices could pose problems for Purplebricks. The report proposes a new category of employee, ‘the dependent contractor’, where the worker is dependent on one contract. In such scenarios, the contractor would have to provide benefits including pensions, holidays, and sick pay, and also pay National Insurance.

He said Purplebricks has always said that Local Property Experts are not employees, but Codling said that if the “dependent contractor” proposal became law and LPEs fell into this category, there could be “significant cost implications” for Purplebricks.

Codling said that taken together, the threats were a possible “double whammy” for Purplebricks, whose shares – described by Codling as “priced for perfection” – were yesterday riding high at 459.75p.

However, this morning a Purplebricks spokesperson poured cold water on suggestions that the Taylor Review would affect it at all. She said: “We do not consider that the issues raised do or would have any impact or relevance to Purplebricks and the relationship it has with Local Property Experts.”

The ‘hire realtor’ link was visible yesterday evening but may have since been removed.

https://www.amazon.com/Hire-a-Realtor/dp/B00V6D6MZ2

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