Everything is changing, the world is digitalising, rapidly.
No industry can afford to stay stagnant and “traditional” in a world that is constantly logged on. That being said, the property sector is experiencing a new wave of innovation. In this current climate, will there be a role for traditional agents as technology and automation takes over?
What is PropTech?
The term PropTech acts as an umbrella term for the companies that are fuelling the evolution of real estate towards automation and digitalisation. It considers technological, and most importantly, mentality changes within the industry.
The Current State of High Street Estate Agents
The property sector has always been described as “stuck in time”. The current process of purchasing a house remains as a labour-intensive, time consuming, complex and paper-bound process.
Despite increasing innovation in certain areas of the property sector, as a whole it remains old-fashioned, tiresome, and requires some serious upgrading. I’m talking a Nokia 3310 to iPhone XS kind of upgrade.
Despite its traditional state, it’s a sector that has created colossal wealth without changing their workflows or processes, creating a lack of urgency to modernise.
The Current State of Online Estate Agents
PropTech, in itself, is not an entirely new category. We are currently experiencing the second wave of PropTech. The first began in the mid 1980s, facilitated by the PC and later the Internet, and was primarily focused around listing services for the residential side of the market. Resulting in the creation of websites like Zillow, Trulia, Rightmove and Zoopla.
The current wave of PropTech was accelerated by: e-commerce, social networking, open-source software and the development of the multi-platform world. There are many start-ups that are currently utilising technological innovation to disrupt the property sector – pushing the boundaries of innovation. Artificial intelligence, smart home viewing, VR, and AR are just a few of the new ways in which the industry is being modernised.
By looking at figures alone, it’s safe to say that PropTech is not a passing fad. The globally invested capacity in PropTech increased from below $200 million in 2011 to over $4.2 billion in 2016, and later to $12.6 billion in 2017.
While there has been significant progress in real estate technology, there are still big gaps in certain areas, and important problems to be solved.
The Future of Estate Agency
The traditional role of the high street estate agent is under growing strain. The digitalisation of platforms appears to be taking over their role in the sector.
Many PropTech start-ups aim to completely replace the high street estate agents. Alex Gosling, CEO of HouseSimple, an online estate agent, estimates that online real estate brokers will have captured 15-20% of the market by 2020. In April 2017, Purplebricks criticised traditional agents as being the representatives of “Britain’s antiquated method of buying and selling homes”.
At the moment, high street estate agents continue to be primary players despite consistent negative public opinion. Why? Consumers are more likely to trust established names with what may be, in their lifetime, their largest transaction. For some time there will continue to be a need for trusted high street estate agents that can aid in special circumstances and for those who want to rely on them as opposed to handling things themselves. However, eventually this need will decrease to the point of rarity. The future is bleak for the traditional estate agency.
The User Experience of Estate Agency
There is a longstanding negative association with high street estate agents, as they are perceived as being extortionately costly and selfish. The process of purchasing a house or renting a flat is already stress inducing, and worsened by the pressures of dealing with an estate agency that worries more about commission than support.
In a world of competition and rising standards and expectations, the experience of a service, beyond its functionality, usefulness and intuitiveness, is the determining factor of its success.
Therefore, traditional estate agents, if they want to avoid extinction in the digital world, must work with PropTech start-ups to digitise their ways of working and create the optimal user experience. They must put the customer into the heart of their business.
Not simply a passing fad, PropTech is aiming to best prepare the property industry for the digital future. PropTech is the future. Eventually, the entire process of leasing and buying property will take place digitally – from online documentation and payments to virtual home selection. We’ve only just begun to scratch the surface when it comes to technology-enabled innovation within the property sector.
The traditional estate agent, in contrast, is a dying breed. If it does not modernise and digitalise, high street estate agents will follow the same path as high street travel agents – rapid decline.
If you have any thoughts about the current state of the property industry or the future of PropTech, do not hesitate to get in touch. And if you’re attending InsTech London’s Confluence of InsurTech, LawTech and PropTech Event, my colleagues Irina Mondea, Chris Tobias and I will see you there!