Purplebricks - reassuringly disruptive

Yet the housing market does not look in danger of imminent demise. Demand for houses is as high as it has ever been, while mortgage rates are unlikely to rise in the near term.

So what sets Purplebricks apart from a conventional estate agent or a pure online operator? The first key differentiator is price. Whereas conventional estate agents may charge as much as 3 per cent commission, Purplebricks operates a fixed-charge system, with a flat fee of £798 (including VAT) or £1,158 in some London postcodes. On a £400,000 sale that's a difference between £798 and as much as £12,000.

An added attraction is the option to delay payment at no extra cost until the sale of property or 10 months from instruction. The deferred payment is financed by Close Brothers (CBG) who pays Purplebricks the next working day. That comes with the tie-in that customers using the deferred payment must use Purplebricks' conveyancing services for the sale. Further, cash flow is considerably enhanced because, unlike a conventional estate agent that is paid on completion, Purplebricks is paid on instruction.

The advantage over using a pure online agency is that Purplebricks operates through a chain of so-called 'local property experts' (LPEs) who are picked for their experience and local knowledge. They provide valuations, support and advice throughout the sale. The added attraction, the company says, is that a customer is steered through the whole process by one person, who is available for consultation on a 24/7 basis, something that pure online operators don't provide. Crucially, nearly 70 per cent of Purplebricks' traffic happens when conventional estate agent offices are closed.

Inevitably, as with any start-up operation, Purplebricks needs capital to expand its network of LPEs, and is not expected to make a pre-tax profit until 2016-17. In the meantime, there will be no dividends. However, the business model doesn't have to support a string of high street offices, and in just 18 months since its launch, Purplebricks says it has captured over 60 per cent of the admittedly small online market. And further progress can be expected. In 2015 it had just 35 LPEs in operation, but this number is expected to jump to 153 in the year to April 2016 and to nearly double again in 2017.

Gross profits in the six months to October 2015 jumped 10-fold to £4m, but sales and marketing costs meant that operating losses came to £6.4m. However, cash generation is growing rapidly, and the company raised £25m in its December flotation.