On a cold Friday afternoon earlier this month, I visited Element Properties & Co in Alexandra Palace, London to chat with Director George Papanastasiou about why they switched to Reapit and film some footage for an upcoming Customer Story. During our conversation, I asked George for his thoughts on the market outlook over the coming months and what agencies should be focusing on as a result. We also talked about the importance of technology in agencies today and how that could evolve in the future.
Tell us about your agency
Element Properties & Co was opened by myself and my brother Cos. We opened the office in July 2020, so just after COVID. We are an independent, family-run business that we’ve built off the back of our grandfather who taught us to open a business based on honesty, communication and trust, and that’s what seems to be faring well at the moment.
We are a little bit different to your traditional estate agency in that we do sales and lettings, but we also have an in-house finance team, and so that also assists us with our portfolio landlords and looking at wider refinances as well. We cover the North and East London areas, so I’m fortunate enough to see different markets through these challenging times.
How do you think the market is going to change over the coming months?
So, I think there will be a varied approach depending on the sector. I think the rental market as a whole will continue to increase. There is definitely outstripped demand in comparison to the supply of the current housing market, especially in the private rented sector.
I believe that with the changes in legislation that are coming up – Section 21s, HMO licencing, being from selective, additional, mandatory – all of these additional costs that landlords previously didn’t face. Mortgage relief going out the window for a lot of buy-to-let landlords that don’t hold their portfolio in companies, so their tax has just skyrocketed, and that’s going to impact the supply chain even more so.
So, I do think that the rental market will become harder for applicants to find homes and in turn that will naturally drive-up prices. So, I think that it’s definitely something that in the coming months will be maintained as it has been in the past year or so.
On the sales side, I believe that mortgages will be slow for the next month coming into Christmas. I do not believe that that’s something out of the ordinary in my opinion. I think that is something that’s seasonal and is returning to pre-covid levels. We have had a crazy two years of market and that can’t be sustained forever. I think the sentiment is that the bank’s fiscal years start in January, and I think that we will find more competitive rates come January which will facilitate some more first-time buyers and that movement in the sales market.
I think prices will come back down to pre-pandemic levels. I do not believe that it’s going to be this huge crash as is sometimes reported. I think it will be something that over the next year or two we’ll see the markets steady and flatline to where it was around 2020 levels or the backend of 2019.
So, it’s one of those things, unfortunately, we can’t predict everything and if I had a crystal ball, I wouldn’t be doing this. But, from the data that we have and the finance team that we have in-house and the ears that we have on the ground, with regards to what that market outlook looks like and the statistics behind it. Yeah, I think sales will come back in, to a steady demand. Mortgage rates will steady around the 4 – 5% mark, at a residential level, and I think buyers will just accept that this is the new sentiment. This level of interest rate is still comparatively low over 150 years of property data. You don’t have to go back more than a couple of decades to see 12-15% interest rates.
So, I think it’s just one of those things that we’ve been fortunate to have ultra-low interest for a decade, and it can become a bit habitual to think that that is always going to be the case. Unfortunately, that time has turned, for other economic reasons, but I do think at the level that we’re at, the lenders will find a change in their criteria to facilitate the lending of money, as ultimately that’s what their business is, they sell cash. So that’s where they need to be providing a service and without them doing that then the market just simply stagnates. So, I do see movement next year. Definitely at the earlier part rather than the later, but time will tell.
What should agencies be focusing on over the coming months?
Key from the start is providing the best service possible to your clients, ensuring communication, clear timelines to things, delivering on your word. I think estate agents need to be coming in with honest appraisals as to where the market is going to be, we’re not in the stamp-duty holiday. Those astronomical prices have gone, so we need to be realistic, and I think providing honest feedback on things is going to be super important and having that communication log with your clients either as applicants, tenants, buyers, or vendors and landlords.
I think the biggest challenge that we will see for a lot of agents will be the selling up of private rented stock. I think we’ll see the standard landlord that owns one to five properties in their personal name will start to offload, and if that was managed stock for a lot of estate agents then that’s residual income that they may struggle to replicate. You know, a sale on average is a seven-year return on your money, whereas management is a yearly, recurring part of your business. So, I think potentially finding another investor, maybe an outlet to keep that property in the private rented sector as opposed to letting it, just disappear. But again, we still need houses for first-time buyers, so it’s a bit of a lose-lose in that regard.
Ultimately, it all boils down to the service that’s going to be provided by the estate agent, and I think as times get a little bit harder and properties don’t just sell themselves, I think that’s where you’ll see the difference between the good, the bad and the ugly in the estate agency world. If you are providing an A1 service, then the tough times will help generate more business because vendors will see your level of service and they’ll buy into the relationship that they have with you. So, I think that’s where the challenges lie.
How do you use technology to enhance your agency?
Technology is vital for us and I think in general terms technology is vital for everyone in society, but no more so than the real estate market and estate agency world. Covid happening showed how tech can really influence change. Virtual tours for example, we’re not seeing all too often. However, Covid happens, agencies need to adapt, these things become the norm on every single portal.
Something like that goes to show where I think the market can really end up with the use of PropTech. Fixflo for example, for maintenance. Gone are the days of having a logbook, pen and paper of what’s been done and what hasn’t been done, it’s all there for you, with an oversight of the dashboard to know where you end up. That facilitates growth and that facilitates the oversight of a lot of managed properties which you wouldn’t otherwise be able to do if you didn’t have that technology. So, I think tech is super important to the industry as a whole. My opinion is, don’t take tech for tech’s sake. I think you need to be pretty smart and astute with what tech you decide to use and utilise in your business.
There are some things that tech can’t replace, a person at the other end of the phone for example. That’s ultimately the essence of being a good estate agent. But there are definitely tools that we use in our line of work to really alleviate problems that previously would have taken hours are now done in minutes.
How do you think technology is going to change estate agencies?
I definitely think tech will change the industry. I think the modern estate agent is not modern if they’re not adopting tech. I think there will be changes that we see as significant from the tech that is coming and being introduced into the market.
Having said that, as I alluded to before, estate agency is a people’s game, so I think you will always need good estate agents, it’s just making their lives and their efficiency and workload as best as possible to provide a great service. But I do think that the people that don’t adopt tech will find it difficult, as there is new legislation coming out, the likes of Section 21 changes, HMO legislation, and potential rent controls.
All of these things, there will be a tech there or PropTech, in particular, that’s going to assist you and having that to lean on when you’ve got a wide portfolio to look after, is going to be vital. If you try and do things, the old-fashioned way, I think you’re just going to either run out of time or find yourself going around in circles. So, it will definitely happen to everyone. It’s just about what degree you choose to go.