Property Market: Boom or bust, does it matter? There is a bigger threat to the industry
Everyone knows that asking prices are going skyward and agents have very little inventory, vendors are getting greedier as they need higher amounts to cover the cost of their next move, and despite a base rate of 1.25%, the housing market is in rude health.
But if you scratch under the surface and look at the figures such as the just released by the Gov.UK analysis the amount of completed sales is dropping:
“The UK Property Transactions Statistics showed that in April 2022, on a seasonally adjusted basis, the estimated number of transactions of residential properties with a value of £40,000 or greater was 106,780. This is 12.1% lower than a year ago (April 2021). Between March and April 2022, UK transactions decreased by 3.9% on a seasonally adjusted basis.’
Now at some point, rampant house inflation could be dampened by the increasing cost of borrowing. But if wage inflation, spearheaded by bodies such as our friends who keep the railways running and their large pay increase demands becomes a reality, will anyone care.
In terms of industry sentiment and chatter, many are very bullish about their indexes, especially their end-of-year performance for 2021, but what will the end of 2022 look like? It is great that property sells in days if correctly priced, but if you do not have enough stock how do you cover your overheads.
What we are seeing is that many of the big fish are quietly buying up large tranches of agencies with a lettings focus, and utilising software to push efficiencies across their enlarged network. And I see nothing that will stop this combine-harvesting approach from stopping anytime soon.
Estate agency in the UK may well be a national cottage industry, made up majoritively of a huge rump of one and two-branch concerns run by highly experienced owners, but the scope for keeping these businesses at a level of high profitability is becoming far harder. Not so much due to competition, but more because the general public has been conditioned to want more for less, and to want things done now rather than next week.
This new generation which I term the smart/lazy generation buys and sells things in a digital way, they order goods and services in an almost zombie-like digital way with a few clicks on their mobile.
Their parents might feel that dealing with James the local owner of an agency who has been in business selling and letting property for 30 years is the person to deal with. But the next generation uses their digital side to ‘find’ the best agent for them, negating the old ways of doing business.
“If an analogue agent feels they can continue in a business-as-usual way, ask yourself why when 90% of agencies still have their agency doors locked are you still doing business.”Andrew Stanton
And there are two points here, if an analogue agent feels they can continue in a business-as-usual way, ask yourself why when 90% of agencies still have their agency doors locked are you still doing business.
The second point is that the general public, or the younger smart/lazy generation, never sleep. They are being consumers and communicating with everyone 24/7, it is just what they do.
If agents do not have a method of digitally delighting them, a strategy where they can engage and do property stuff, then focusing on the problem of where to get the next property or letting listing from will pale into insignificance faced with the paradigm shift in consumer behaviour.
Agency is a people business, but if you no longer can talk to them in the communication channel of their choice, at their favourite time, they will seek out agents who do and will. Amazon is a marketplace that never sleeps, very soon property will follow suit.
Proptech SME YouConvey gets £300k funding
In what is increasingly becoming a vertical, digitising the boring bits so more fee-earning upfront processes can take place, YouConvey, founded by Eddie Goldsmith, has just received investment to scale up its operations. Nova Growth Capital saw the opportunity.
What is good news is that the founder knows all of the pain points of the process, with his huge amount of industry knowledge, and is not creating solutions in a vacuum without market insight, a thing that in my day job as a consultant to proptech founders I see too often. Commercial ideation fails as founders and their teams fail to see what is really useful tech.
Though very much buzz words ‘upfront information’ is the thread of what YouConvey operations are all about – a type of triage service that keeps all the stakeholders in the loop, saving time and getting that all-important change of ownership over the line.
What is truly noteworthy is that small solutions like YouConvey have scalability, they are not looking to overhaul the conveyancing or buying process, they are just a digital hand tool that empowers the user so they can do the day job better and more quickly.
This is better than trying to herd a lot of people to do things in a different way. Technology should not disrupt, so much as it should gently and invisibly nurture and speed operations.
Andrew Stanton is the founder of Proptech-PR, a consultancy for Founders of Proptechs looking to grow and exit, using his influence from decades of industry experience. Separately he is a consultant to some of the biggest names in global real estate, advising on sales and acquisitions, market positioning, and operations. He is also the founder of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.