Rethinking property markets: creating control in chaotic times
By Roland Whyte, CEO, Nokkel
“Some things are in our control and others not.” Simple words; obviously true – yet also the foundational observation of the ancient Greek stoic school of philosophy. And if these words, found in Epictetus’ Enchiridion, have ever been relevant to the UK’s property market, it’s now.
Because there are a lot of things beyond our individual control happening right now. Mortgage interest rates tipping six per cent have returned, some are predicting house price plateaus, others, crashes. The Bank of England has brought the base rate to 3 per cent from 2.25 per cent – the biggest single rate hike in 30 years. The news is moving so fast it can be difficult for buyers, sellers and owners to keep up, let alone feel remotely in control.
Which is why now is the right time to refocus on what we can control. And then, as the stoics would have advised us, we can pour our energies into those things and improve outcomes.
This leads us to a focus on informed and empowered decision making through better data, and a more proactive approach to using it. In fact, we believe that these improvements have been badly needed in the UK housing market for some time – but now they are desperately so.
The dearth of data
Whether looking to buy, sell or stay-put, there is only one real source of information for people today – the estate agent (and their listings on Zoopla, Rightmove etc). However, the estate agent is not a disinterested party – it is in their interest to entice the prospective seller to give them their business and to tempt the staying-put into upping sticks. It is not conspiratorial to point out that the price on the listing is not set by a neutral entity.
This data is also highly sporadic. Some online calculators may give a very rough value estimate at any time, but the figure is only properly revisited and updated when it comes to a transaction – either of the property or of the mortgage on it. That introduces a large margin of uncertainty during the sizable interim.
Why it matters
It is frankly bizarre that these circumstances have been allowed to persist unchallenged. For most people, property is the single biggest financial asset they will ever own, as well as being the roof over their heads and the place they raise their families. As such, decisions around property and how to pay for it rank among the most important decisions we ever make – yet we are doing so based on scant and potentially skewed data.
Now more than ever people need and deserve up-to-date, accurate data on what property is worth and what they can afford so they can make decisions on buying, selling or even increasing the value of their current property with a view to securing a better price on the market or a better loan-to-value when remortgaging. And they need to be able to deliberate on these decisions at any time, not just when their fix-rate ends, and without having to dangle the prospect of a transaction in front of an estate agent.
So, what can we do? We can’t drag interest rates back down, we can’t influence prices but we can close that information gap. We can build tools that give people regular, impartial data on properties they own or are interested in owning, that give them the information they need to make ‘what if’ dreams turn into ‘when I’ plans.
For an idea of what that might look like, we can glimpse sideways to the world of investment services. Not so long ago, it was possible for advisors to take commissions from product providers, potentially undermining the impartiality of the advice offered. The solution came in the 2012 Retail Distribution Review, when the then FSA banned the practice, along with other reforms. By divorcing the commission-earning transaction from the advice, the regulator improved the market for all. We need a similar separation out of information and the transaction in property.
But there’s no need to wait for the regulator to mandate action. We can do this today by providing an impartial, data-led utility for the property market free from ownership or influence of those trying to drive transaction volumes.
Better preparation, better outcomes
And we can empower people to take more control over their property destiny too. Once that repository for better property data exists, individual users can enrich it further and take steps to optimise outcomes for themselves. For example, users can furnish extra data such as EPC assessments, electrical safety certificates, details of renovation work undertaken, manufacturer guarantees for windows and doors, etc. Suddenly a more detailed and accurate picture of the property emerges than will ever be found in a standard listing, giving buyers more information and sellers the power to get the true value of the investments they have made.
The fundamental usefulness of this idea is recognised by initiatives such as the Home Buying and Selling Group’s (HBSG) BASPI initiative, which wants sellers to compile a detailed information pack to facilitate a more informed selling process. In Scotland, a version of this is already in place with the Home Report. Even without mandatory schemes though, better preparation and more proactivity from individuals will lead to better outcomes.
It is in this sense that property buyers, sellers and owners can focus on the things that they can control and influence, rather than fretting about those beyond their control. Without dismissing or minimising the very real challenges that many face, we are long overdue a rethink of the property market where individuals take more control over the fate of their most important financial asset and are empowered with the tools and data to do so. In fact, when a perfect storm of external factors buffets households to and from, it is more important than ever to take control where we can.