Last year, technology companies led the way for UK start-ups, with the number increasing by an impressive 200% and property technology made up a large proportion of this. Suddenly companies such as Purplebricks.com and Movebubble have become household names and the traditional real estate agents have come under threat from an innovative, more effective model.
In a recent study, conducted by Begbies Traynor, it was revealed that property companies' transactions were 7.3% lower in November 2016 than they were one year previously, which has, in turn, led to estate agents' share prices falling steeply. Foxtons and Countrywide fell by a dramatic 47.5% and 56.9% respectively last year.
So what does this mean for the traditional estate agent market?
Until recently, the property industry was lagging behind in terms of technological prowess, choosing to remain invested in the traditional world of estate agencies. But following the success of Zoopla and Rightmove, proptech start-ups have appeared on our computers and phones, offering streamlined processes that put the customer first. In a diverse arena, which incorporates everything from data analysis to lending, areas that were previously disconnected in the property world are coming together.
This growth represents an industry shift towards the human element of property. Rather than prioritising commission, companies are focusing on attracting a returning customer and positive reviews, shedding the caricatures of double-dealing and greed which have followed estate agents since the 1980s.
Purplebricks is at the forefront of these companies, becoming the UK's largest hybrid estate agency and seeing its shares increase by 20%, despite the declining share values of its high-street competitors. They have successfully separated themselves from the expensive offices and in-house staff, investing in regional freelance 'property experts' who can offer sellers and buyers alike tailored advice, seeing a share price increase of approximately 200% since its floatation November 2015.
The best part about the rise of proptech is that it benefits not only the renters, but also the landlords. Renters can use the online system to book viewing and report maintenance issues 24/7 through portals, with research from Purplebricks revealing that 60% of activity happens when traditional estate agents are closed. The portal also allow landlords to keep an eye on payments and be as involved as they would like in the maintenance of the property, alongside having all the information for their portfolios in one place.
In addition to revolutionising the lives of renters, it can be argued that proptech has also fundamentally changed the way the buy-to-let industry works, as it has allowed for the creation of property crowd funding. This innovative concept gives budding property investors the opportunity to start investing in property with as little as £100 and provides them with a range of developments to make an informed decision. Once you have decided, the platform will purchase the property and rent it out, giving the investor an immediate percentage of rental income.
The growth of proptech has allowed for an incredible shift from an opaque industry to a transparent and accessible one, giving the power back to the renter and landlord while loosening the stronghold estate agents have over buyers and sellers. These companies are offering people an alternative route to the marketplace and thus, reducing the need for traditional agents, who will need to embrace this new stage in property's evolution.