The property market was allowed to continue operating during the second lockdown, which was good news for the 500,000 or so current transactions that are proceeding (albeit slowly). However, strict protocols on viewings and valuation appointments continue and many offices are being manned only by a limited number of staff, with working remotely the preferred option.
There is no doubt that covid-19 will be looked back on as creating the biggest paradigm shift since the arrival of the internet in how the residential property market (and many others) operates. The need for the habits of the nation to change will be key to steering the ship through the choppy waters ahead.
Back in March when the first lockdown was imposed, the estate agency industry was forced to think outside the box and many introduced new methods of working, often focused on technology and the ability to work remotely.
Reducing costs was uppermost on everyone’s agenda and there was a lot of discussion around cutting back on marketing expenditure, particularly on the major property portals which had become the third-highest area of expenditure for most businesses after people and premises.
Change was already happening but covid-19 became a catalyst for accelerating the move to new ways of working. Or did it?
Well, for many it did and those business have incorporated new ways of working, such as virtual viewings, into their day-to-day operations, with subsequent improved productivity. Some businesses have cut premises expenditure through assessing the true need for what they had, and some have withdrawn completely from the traditional high-street model.
Business have incorporated new ways of working, such as virtual viewings, into their day-to-day operations, with subsequent improved productivity
However, the first lockdown was released quite quickly in May and, with the government (unnecessarily in my view) incentivising moving home by applying a short-term stamp duty holiday, the floodgates opened and transactional volumes soared. Suddenly those in the residential property industry were busy and struggling to deal with the increased levels of both supply and demand.
The outcome? The majority of the industry simply ignored the lessons being learned from the shock of the first lockdown, stopped planning and taking action for a new and more productive future and reverted to the way things were before.
Now, we have huge, constipated pipelines of transactions, with transaction times lengthening by the day. Rising unemployment, a growing recognition that sales may not complete within the government’s short-term stamp duty holiday (of course, the government might take action here to avoid a cliff edge in March 2021) and hugely reducing confidence on which all free markets rely.
This may result in the market failing to realise the full financial benefits of this surge in activity. It may also result in the market ‘dying on its backside’ when the current conditions change, as many transactions will simply have been brought forward and squeezed into a tighter timeframe.
Those businesses that adjusted their business plans, changed their modus operandi, cut or removed waste and unnecessary cost and invested in better systems, processes and training are, of course, gaining from the aforementioned external factors from which everyone has benefited, but are also in a much better position to capitalise during future restrictions.
I am a huge believer in ‘controlling the controllables’ – no individual or business can control the pandemic, the wider economy or other external factors, but all can control how they prepare and pivot to both mitigate their position and take advantage of the opportunities that exist.
The use of technology to do the heavy lifting – for example, accompanied video viewings and valuations as a first stage in the sales funnel to increase productivity, has been a huge success for those who have embraced and developed their procedures accordingly.
Controlling and maximising the return on marketing expenditure is also important. It is often said that most businesses know that half of their marketing spend is wasted – they just don’t know which half!
In a world where remote working is becoming more and more common, does a business need its current premises footprint? It isn’t always easy to simply walk away from premises, and there are lots of considerations around technology, connectivity, communication and culture to be considered, but it would be foolish not to be reviewing. Some of my clients have now realised how much surplus accommodation they were paying for and have taken steps to reduce.
I talk about the seven P’s – not the original marketing group but the following pyramid of Ps. The first four are people, productivity, portals and proptech. Getting these right leads to the next two Ps: proposition and productivity. Making yourself stand out from the crowd, helping create a unique selling proposition (USP) and through training, processes and systems increasing productivity. All of these lead then to the main P: profit!
Businesses need to change or die. Covid-19 is a huge catalyst for change – change that will happen anyway but that is accelerating exponentially.
People are often afraid of change and it needs planning and managing because, as Machiavelli said in his masterpiece, The Prince: “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions and lukewarm defenders in those who may do well under the new.”
Change or die? We’ll see.
