Emerging PropTech Disruption

The real estate sector has looked ripe for disruption for some time with the recent COVID-19 challenges adding impetus to this trend. Consider the following attributes which may bring innovation and disruption much sooner than expected:

  • Social distancing and isolation will reduce the numbers of onsite home inspections and not just in the short term. Buyers will be looking to do as much research as they can online before committing to visit a property
  • The real estate market will be in turmoil from the overall economic impacts of COVID-19 with millions of people now out of work or working less hours. Many establishments will not survive, and others will take many years to recover eg tourism. migration
  • Buyers will be more particular about where they want to live and the lifestyle they prefer, especially given the focus that COVID-19 has activated both economically and socially
  • Buyers’ prevailing “fear of missing out” attitude that has been typical of the last decade for property in Australia will disappear. Buyers will now be able to take their time in considering what they really want in a property, with less pressing need to compromise merely to get into the market
  • This move from a seller’s market to a buyer’s market will reduce available stock levels and impact pricing. Sellers will therefore be looking to minimise sales costs and buyers will be making lower offers against listed prices
  • With interest rates being very low and now due to remain so for some years, banks will need to ensure prompt and competitive customer service in order to maintain market share
  • The ability of buyers to better understand any individual property risk will put pressure on insurers to provide customised insurance rates eg pandemic cover, working from home considerations

The above attributes will drive and mould the PropTech sector, impacting various parts of the market, like:

  • Alternative selling models which avoid real estate agents’ commissions. Fixed fee selling is part of this mix together with “sale by owner”
  • Solutions which purport to provide more accurate valuations for any individual property thereby giving buyers greater price leverage knowledge
  • Video-conferencing solutions which allow virtual walk-throughs of a property
  • Greater use of relevant economic, social, and cultural data for any locality to provide more lifestyle visibility to buyers. This might include demographics which disclose local mortality risk for pandemics
  • Especially in the context of global warming, more accurate data on risks such as bushfire, flooding, or subsidence at the individual property level
  • Sentiment analysis, possibly from social media posts, about particular local areas
  • Predictive modelling, possibly using AI, showing future trends for the locality, economic and social
  • Regional data analysis down to address levels which buyers may use to proactively seek out unlisted properties whose owners may consider selling
  • Alternative property purchasing/funding models which match customer preferences eg pre-approved properties for sale, buy now pay later, loan ratio flexibility, valuation accuracy, fractional property ownership, customised/personalised insurance, etc
  • Peer-to-peer buyer and seller solutions in an eBay-style model
  • Automated online self-service conveyancing and settlement

All in all, the property market is in for substantial change with the greatest opportunity being in the hands of buyers and the greatest challenge being that faced by the traditional real estate agents, banks, and insurers.

Author: Stephen Walker, GM Centre of Excellence for Geospatial in Australia