PropTech is the use of technology to help people research, buy, sell and manage property and land.
In a February 2017 whitepaper, the government admitted that the UK housing market was ‘broken.’ Home ownership for many Britons has become little more than a pipe dream due to spiralling costs, with average house prices jumping to around 7.5 times the average wage.
The cause of this is a housing sector that has lost touch with the people it ostensibly serves. With scores of homes being built with no consideration for the needs of their occupants, and estate agents charging a fortune for an antiquated service, billions of pounds have been wasted because of the sector’s inefficiency.
So has anything changed in the two years since the publication of that government whitepaper? Fortunately, the tech boom of the last decade has helped us get back on track, paving the way for a radical overhaul of the system. PropTech has exploded over the last few years, expanding from a niche market into a multi-billion pound industry. Yet despite its rapid growth, many of us are still unclear over what exactly it is. A questionnaire put forward recently by Anthony Walker, chief executive of GoReport and chair of the RICS Building Surveying Professional Board Group, showed that 59% of surveyors use property technology – despite only 43% claiming to understand it. The label is tricky to nail down, encompassing a vast rage of property and estate-related endeavours that overlap with FinTech (financial tech) and ConTech (construction technology).
According to entrepreneur James Dearsley, PropTech is “one small part of a wider digital transformation in the property industry.” Put simply, it takes all the difficult tasks involved in finding, buying and protecting your home, and streamlines them using modern tech. This has been a long time coming. The traditional process of buying your home through an estate agent is outdated. Agents have garnered a bad reputation for charging extortionate fees, usually worked out as a percentage of the sale price. What’s more, visiting an estate agent feels archaic in an era where we do most of our buying and selling online.
The property market has been crying out for change. Now, there are people who can give it to us. Take the start-up Housesimple.com for example. Operating on a fixed fee basis to facilitate viewings and offers for houses, the company has bypassed traditional estate agents by offering its service completely online, without any need for a physical presence on the high street. The lack of overhead costs allows Housesimple to charge less money for its services, with its flat fees starting from as low as £595. By contrast, the average agent fee is 1.3%, which going by the average housing price in the UK is £2,837. Building on the formula created by web-based services such as Rightmove in the early 2000s, startups such as Housesimple and Purplebricks go one step further in cutting out the middle man.
Elsewhere, help is at hand for first-time property buyers in the form of Proportunity, a PropTech startup based in London. Using AI and machine learning to forecast the future value of a property, Proportunity allows users to borrow money against that estimate, boosting their deposit to purchase a house. This could provide a major boost to first-time buyers, as many young people struggle to get their foot on the property ladder due to inflated prices.
So What Next?
So, is it nothing but blue skies ahead for PropTech? Perhaps not, as experts predict it will take time for much of this technology to become accepted in the mainstream. Walker suggests that people remain wary of PropTech and are unwilling to spend money on it until it is needed, something which he describes as being “a little like not learning to drive until someone asks you to make a journey that they want completing by a specific date, a date that does not take into account the time needed for driving lessons.” In other words, better to get to grips with PropTech now than play catch-up later.
The solution, Walker suggests, is up-front investment in PropTech ranging from installation of hardware and software to adequate training for workers. This funding could be hard to come by, however, due to a wariness and general failure to understand what PropTech is. The issues surrounding housing which have plagued society for decades are so deeply embedded that many of us lack understanding or even awareness of the problems. Without a greater societal awareness of how and why the housing sector is failing, the need for PropTech will remain unclear to many of us.
Housing is an issue that has been neglected for too long, especially considering it affects us all directly. In the modern age, PropTech innovators could be the key to fixing the housing sector and giving us a chance to acquire the homes we want. We’ve seen far too many ‘home of the future’ daydreams with little thought given to the planning and infrastructure needed to get there; it’s time to start putting our money where our mouth is.