Innovation in the Property Industry
Digital disruption has worked its way through the bedrock of untold industries, from Airbnb’s transformation of hospitality to Uber’s influence over the very ways in which we move through the world.
Comparatively, property has—up until very recently—remained relatively immune to such tectonic shifts. As the authors of a recent report sponsored by the Saïd Business School at the University of Oxford note, “[R]eal estate is a slow moving asset class, and the real estate industry is highly conservative.”
But lately, the industry is standing on a new precipice of innovation, with the rise of property technology, or PropTech, reforming the way consumers research properties, finance those decisions, and ultimately purchase a new home. As HSBC writes in a recent international survey, “Funding of disruptive property technology (PropTech) firms has grown phenomenally, from USD221 million in 2012 to over USD2 billion in 2016. PropTech is becoming the new FinTech (financial technology) and will bring similarly radical changes over the coming years.”
The first, and most visible, arena of these changes has been in the research sphere of the home-buying process. As HSBC’s report notes, this phase is already highly digital, with 89% of recent home owners having done their research online; UK homebuyers were, of the populations surveyed, notably the most digitally active.
But being comfortable with digital research is only the start, and many sites—the likes of Rightmove and Zoopla—are effective but often blunt tools. Online-only estate agency The Modern House, founded by two former design professionals in 2005, has since carved out an influential niche, whereby boutique service and a carefully curated selection of “architecturally arresting” properties cater for aesthetes looking for a more personal touch. The approach is proving successful: the agency grew by 35% over six months last year, leaving high-street competitors like Foxtons and Savills in the dust.
If careful curation and visual savvy are influencing the research portion of the house-buying process, then providing consumers with more advanced digital tools is another important development. Real estate platforms will soon give prospective buyers the opportunity to “us[e] search, voice, photos and other data from [their] web history and connected devices – including personal artificial intelligence (AI) assistants like Amazon Alexa” to map and hunt for detailed property preferences, according to PropTech Consult firm co-founder James Dearsley. Virtual reality technology, meanwhile, will make fifteen-minute property viewing windows obsolete, and will let individuals “‘live’ in a virtual version for several days to truly try before they buy.” Drone photography may soon, too, become a default in digital listings.
Innovators are also setting their sights on the financing portion of the house-buying process. For years, the property industry has been “plagued by inefficient processes and unnecessary transactional costs defended by self-interested professionals and institutions,” making it especially ripe for disruption.
Now, entities like Habito, which raised £18.5m in an investment round last year, are hoping to undercut traditional brokers and agents. “Its algorithm has been trained on thousands of real-life interviews conducted by personal mortgage brokers before being checked by a financial expert, with tedious application forms filled in automatically.”
In other words, as founder Dan Hegarty remarked in the recent House of Killik panel, Habito looks to “make something evil and painful and unpleasant disappear from people’s lives.” Free to use for prospective buyers, the site streamlines the burden of mortgage application bureaucracy; moreover, once the site has approved consumers, they are considered clients in perpetuity, and Habito pledges to assist with any future refinancing efforts.
For those selling their homes, meanwhile, Nested seeks to reduce pain by curtailing the uncertainty and inefficiency that have long characterised the process. The digital estate agency operates in a manner that’s chain-free, promising to “advance what you need to buy your new home, whilst we sell your old one for the best possible price.” Its vow to sell homes within 90 days—or front customers cash—earned the start-up £36m in a new round of funding late last year; currently, it’s heading towards a transaction rate of 50 houses per month. As co-founder Matt Robinson remarked in a recent interview with TechCrunch, “Home sellers don’t know the only two things that matter: how much they will sell for and when they will receive the money.” Nested’s revolutionary idea is that, with their platform, both are guaranteed.
If innovations in PropTech are still nascent, the industry is poised for big things in the coming years. “There is no denying the huge energy, creativity and optimism behind the 2015-2020 wave of activity that makes up PropTech 2.0. Thousands of extremely clever people backed by billions of dollars of often expert investment are working very hard to change an old-fashioned and inefficient industry that can be improved by idealism and which sucks out large fees for self-interested professional advisors.” At the high-end of PropTech, platforms like Propy offer a glimpse of a possible future: enabling deep-pocketed international buyers to purchase investment properties in cryptocurrencies, with blockchain integration to guarantee efficiency and security of sensitive information.
However, “underlying this huge capitalist and social endeavour is a clash of generations. Many of the startups are driven by, and aimed at, millennials, but they often look to baby-boomers for money.” Millennials may be far more comfortable than their parents using chat-bots and other digital interactions for mortgage advice, but PropTech’s fortunes will also rely on that generation’s ability to purchase in the first place. Following news that home ownership has collapsed amongst young people on middle-income, with their chances of owning a home having halved in the past 20 years, the need for systemic changes and evolving regulations will certainly impact the industry’s future.
 Oxford University
 TechCrunch, https://techcrunch.com/2017/10/23/nested-36m/
 Oxford University
 Oxford University
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