In Modern real estate – is Artificial Intelligence – friend or foe?
Just today I have read a number of articles, posts and views on Artificial intelligence, with people at polar extremes of the spectrum, seeing it as a helper or a destroyer of industry jobs and all that humans hold dear.
What is certain is that AI has come a long way from its origins 68-years ago, and whilst it is an ever-increasing arena, in essence the replication of the neural pathways of the human mind in machines sums up the tsuanami of digital and technological change we ae swimming in, barely keeping ourselves above the water. And it is the application of this concept which underpins much of the technology of today. Some pundits makes the point that in partnership AI and humans have a great result, but I am going down the other path, AI will soon leave humans behind, a bit sci-fi? let me explain.
Simply put, Artificial intelligence is built upon mathematics, statistics, probability, information engineering, hooked up with applications to then perform processes. So, back in the early 1990’s being an avid chess player I bought a Kasporov chess computer game, it was then cutting edge. I played against ‘Gary K’ most days and worked my way through the levels, much like AI and machine learning, where computers through processed data become smarter. Then came the day that at the top level I could beat the computer.
Here then is the kicker, the advance of computers capacity, the little brain in my computer game, increases in a non-linear fashion, doubling annually. Aided by advances and the cost of tech coming down in real terms. In the 1960’s IBM computers sent us to the moon, the IBM computer of 2020 capacity wise is many thousand times more capable. So, though the human touch, is presently considered to be essential in for example estate agency a ‘contact people sport’ where maybe the letting agent is helping tenants with their rental maintenance woes. It may not always be the case.
In 2030 given that AI will be able to teach itself to be even cleverer, might it be AI that detects problems in a rented environment, via controls / sensors from the smart tech family of proptech, which through AI results in the tenants environment being repaired without human intervention? Or is all this decades away?
I do not think so. What will happen to humanity, hopefully, if the boring mundane sand that clogs up our everyday life is filtered by AI, we can focus on some bigger problems, saving the planet, looking after those in need of care, it will just take a re-adjustment of some of our own neural pathways to human learn different and better ways of doing things.
Going back to my chess metaphor, we may not be at the checkmate stage, but Covid-19 has seen a massive reset button in how we run our lives, what our lives look like and how technology can give us a better UX as we move from cradle to grave. The property asset sector, the oldest and biggest and richest marketplace on the globe has been very slow to respond to doing things differently, I think now with AI well and truly out of Pandora’s box, we are all going to get a generation of change in less than a few years.
Recent industry analysis across the whole of the newbuild sector for the private buyer, has predicted that although to date many of the developers have built a similar number of properties in 2023 as they did in 2022, this activity will now taper off, as new registrations for brand new property has fallen off a cliff.
With a desperate race to get key numbers of new homes exchanged by the end of Q4, it is clear with some developers openly admitting that they are getting very few new reservations, that 2024 may be a very bleak time for them. Obviously, these builders provide housing for the housing associations and local authority stock, but lack of through put income is likely to hit both shareholder stock values and see redundancies in the industry.
The ending of Help-to-Buy, which closed last October with the last homes being moved into in March of this year under the scheme, plus sky-high mortgage rates has made it very hard to convince buyers that now is the time to buy a new home. Or as Jason Honeyman CEO of Bellway put it, “The backdrop of macroeconomic uncertainty and cost-of-living pressures affected consumer demand during the year, and given affordability remains constrained by higher mortgage interest rates, underlying trading conditions are likely to remain challenging in the near term.”
Even mighty Barretts have publically stated that next year they feel sales volume will be at least 20% down on this year, which given the Prime Minister and Chancellor are trying to say that inflation is going to halve pre-election, it would seem that either the housebuilder is talking nonsense or the politicians are.
It is ironic that DHLUC secretary Michael Gove has been putting out soundbites about getting to grips with supplying more not less housing, and though the mythical 300,000 units a year has long been dropped as a party slogan, it has possibly been the fiscal mismanagement sparked by Rishi Sunak as the SDLT giveaway Chanceller, that supercharged all house prices, giving builders huge profits, now to be followed by an arctic winter of fewer sales with even fewer sales for the foreseeable future.
Andrew Stanton is the founder and CEO 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 and editor of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.