It’s been a difficult few years for estate agents.
In the UK, the uncertainty caused by Brexit, and the parliamentary gridlock caused by a hung parliament, suppressed the market.
Things changed in December 2019: the clear election result meant - if nothing else - some degree of certainty around which businesses and individuals could plan.
In January 2020, UK house prices rose by an average of 1.9% YoY, the largest monthly increase for 14 months. Britain’s Office of National Statistics reported increased house prices in every region of the UK. Buyer confidence, suppressed for so long, had returned to the market.
It wasn’t to last. The effect of coronavirus and the accompanying lockdown has had a chilling effect on the market. With clear government rules about not leaving home except for specific, necessary reasons, viewings have obviously dried up.
The full implications and how long they will last are as yet unknown. We do know, however, that the credit crunch of 2008 led to a reduction of 60% of property transactions in the immediate aftermath. It seems reasonable to suppose that the current crisis could have a similar, if not worse, impact. Typically, in an average month, there are about 66,000 property transactions every month in Britain. Assuming a 60% reduction, that would mean falling to 26,400. Some are reporting, as a worst case scenario, price falls of up to 20%. No-one really knows, and a key question is whether, once the crisis passes, things bounce back rapidly or if the market will take time to recover.
So what can estate agents do in this situation? We think there are three things:
1. Invest in virtual reality:
This has been a key trend in the market for a number of years but the current situation - where in-person viewings are off the agenda - illustrate the importance of presenting a property virtually as best you can.
Estate agents have become more sophisticated at providing online showcases for properties - with video tours and drone photography - but virtual reality enriches the experience further. Potential viewers can put on a VR headset and walk through properties without leaving their own homes. The virtual experience could either be a 360 guided tour, or an interactive tour where viewers click on hotspots to see more. The latter is more complicated to make but in future, we’re likely to see estate agents make more use of it. In the meantime, on a simpler level, vendors could give home tours via Skype or FaceTime.
2. Greater use of automation:
Again, automation has been an industry trend for a while, with forward-thinking agents providing self-service portals to automate some of the admin tasks for buyers, sellers, tenants and landlords. In the future, we’re likely to see automated valuations increasing in accuracy which - whilst never fully replacing face-to-face valuations - will empower both buyers and sellers.
The existing house-buying process can be clunky and time-consuming, typically taking up to 12 weeks or longer in the UK. Automation as well as greater IT integration between estate agents, mortgage providers, surveyors, solicitors and insurers could streamline the process and create time savings.
3. Greater use of big data:
Estate agents are privy to large amounts of data. For example, they can see via property portals or their own websites which properties receive the most clicks, and within each listing, which images are most popular. Search term analysis will reveal the most searched for terms - e.g. “flats in Douglas”. The wealth of data could allow estate agents to create psychographic profiles of potential buyers, to tailor their marketing accordingly. On social media, the range of targeting methods allows them to market certain properties to certain audiences, instead of relying on mass targeting and hoping for the best.
These are turbulent times and no-one knows fully the medium and longer-term impact of the crisis on the real estate sector. If you need additional digital support at this time, please get in touch.