Breaking Property News – 24/10/2023
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Bricks&Logic on how innovative data analysis creates trusted housing market oversight
Michael Joyner, Chief Data Scientist at Bricks&Logic explains in this thought leadership commentary how the company utilises data in an innovative process which guarantees accurate market oversight that occurs in real time. Explaining in detail the problems that have to be overcome to power useful market intelligence.
‘Over the past year, the housing market has been rife with uncertainty. From alarming predictions of house price crashes due to soaring interest rates and the cost-of-living crisis, to optimistic forecasts of a robust recovery in early 2023, the market has shown varying degrees of resilience amid economic challenges.
Market participants, ranging from first-time buyers to large property developers, have been eagerly seeking data to better understand these market dynamics. In this article, we will discuss various data sources, examine their benefits and limitations, and explore how Bricks&Logic is addressing the gaps in existing data to provide a comprehensive view of the local housing market.
Land Registry Data The Land Registry dataset serves as a comprehensive public record of property transactions in England and Wales. It captures crucial information such as the sale price, date of sale, and type of property sold (for example, detached, semi-detached, terraced, flat, etc.). Given its completeness and availability, this dataset is widely used for understanding property market trends. However, it has some significant limitations, particularly when analysing the current state of the housing market.
Processing Delay: The Land Registry generally requires 2-3 months to process transactions. As a result, the dataset lacks the most current sales data. For instance, as of the end of August 2023 (time of writing), the most recent recorded sales are from June 2023.
Time taken between sale agreed and Completion: The true market value of a property is best represented at the point when the buyer and seller agree on a price. From that moment, it usually takes an additional 3-4 months until the property transaction is officially completed, and the keys are handed over. The Land Registry dataset records the completion date, not the date when the sale was initially agreed upon. Consequently, if the data reports sales for May 2023, it is actually reflecting sale agreements made in January or February of the same year.
The chart below demonstrates how the annual percentage change in the Land Registry House Price Index lags behind that of Bricks&Logic by a period of 3-4 months.
Listing Price Indices In order to get around this data lag the most readily available alternative is to use listing prices to understand the market. Whilst this does provide us with more up to date data there are still further drawbacks using this methodology.
Not Reflective of Actual Sale Prices: Listing prices are merely the initial asking prices set by sellers, and there’s often a gap between the asking and the final sale price. Listing prices can be influenced by sellers’ emotional attachment, misinformation, or speculative hopes, and they may not reflect what buyers are willing to pay.
No Sale Data: Not all listed properties are sold. Relying on listing prices might include data from properties that remain unsold for prolonged periods, potentially skewing market perception.
Seller Resistance: Sellers may be reluctant to approve a price reduction in a weak market, either due to emotional attachment, financial goals, or because they might think that holding out will eventually attract a buyer willing to pay the higher price.
Agents Reluctant to Reduce: It might not just be sellers reluctant to reduce prices if prices are falling. Estate Agents themselves may be reluctant to drop the price of listings as reducing prices could negatively affect the reputation of the estate agency as it might create the image that they are unable to sell properties at market value.
The maps below presents the latest Zoopla House Price Index (HPI), which indicates price increases in nearly all regions, with only minor declines observed in the South. This contrasts with the Bricks&Logic HPI, which shows significant price drops, particularly in areas like Cornwall, Brighton, and Lincoln. The key difference lies in our methodology: unlike Zoopla, we don’t rely solely on absolute listing prices, which have limitations as previously discussed.
Understanding the Market Through Bricks&Logic’s Comprehensive Approach
For an in-depth explanation of how we calculate our House Price Indices, please refer to our dedicated blog post. The key takeaway is that our approach is multi-faceted, leveraging the power of machine learning and artificial intelligence whilst integrating data from our partner agents to offer a nuanced interpretation of market trends.
The image below outlines our meticulous process for handling agent data to extract as much valuable information as possible. We focus on capturing critical data points such as:
- Agreed sale or rental price and date
- Price reductions, if any
- Agents’ estimates of probable sale/rental prices
By amalgamating multiple data sources and applying advanced analytics, we aim to provide the most accurate and comprehensive view of the housing market.
Conclusion To sum up the dynamics of the housing market are both complex and subject to a myriad of influences, from economic indicators to buyer and seller behaviour. Traditional data sources, like the Land Registry and listing prices, offer valuable insights but come with inherent limitations, such as data lag and the failure to capture the nuances of real-time market conditions.
Bricks&Logic addresses these gaps through a comprehensive, multi-layered approach that leverages advanced analytics, machine learning, and real-time data from our partner agents. Our methodology allows for a more nuanced and timely interpretation of the market, providing stakeholders—whether first-time buyers, experienced property developers, or anyone in between—with the tools they need to make informed decisions.
Author: Michael Joyner, Chief Data Scientist, Bricks&Logic
Opening the door to easier property transactions
Full disclosure I and my dog Zara really like and trust in a special young man Michael Wadsworth, Founder of Proptech adoor. Who we usually find hard at work in his garden shed when we get on a video conference call. It is a big shed and that is important because Michael has a big future ahead of him. He is not a client of Proptech-PR ‘A consultancy for Proptech Founders’ but we have over the years been gently nudging Michael on, as he definitely has star quality and grit. It helps that he is working with Geovation & HMLR which many of my daytime clients also are or have been, because that means his company will be in the correct shape to scale.
The following has been recently published on the Gov.UK HM Land Registry website, I reproduce it in full, as it gives an excellent thumbnail sketch of what Michael and his team have been up to. And if there is anyone out there in my community who feels they could help Michael move all of this along, (as he does have a day job too), I would on a personal level be extremely grateful.
Over the years I have met only a handful of Michael’s – founders who are going to get there, it is just a matter of how quickly and with whose backing, so anyone looking for someone exceptional who understands his space backwards you know where to find him. The following then is taken from HMLR websited dated 19th October 2023.
Property technology (PropTech) provider adoor with Founder Michael Wadsworth joined the Geovation Accelerator Programme in October 2020 – a programme backed by HM Land Registry and Ordnance Survey which provides geospatial and PropTech start-ups with grant funding and 12-months of support.
Michael explains why he and the team set up adoor ‘Currently, transactions take over 151 days on average to complete and nearly half of transactions fell through in the first quarter of 2023. Conveyancers and estate agents are battling higher caseloads, with more enquiries, meaning they have less time to complete tasks.
We’ve built adoor to help buyers, sellers, conveyancers and estate agents track the progress of property transactions from mortgage to moving day, whenever works for them. By enabling everyone to see the entire chain in one place online, we have seen users save up to seven hours per week in reduced admin. We’ve also seen fall-throughs reduce to almost zero with greater clarity and transparency made possible by tracking the chain in one place.
We provide proactive notifications on upcoming tasks and give everyone the same view on progress. This reduces the need for chasing calls as you can see the next stage and its due date across the entire chain of transactions. Connecting services such as identity verification, anti-money laundering checks and property searches all within the adoor platform also saves time.’
How we use data ‘We use HM Land Registry’s title numbers to validate each property on adoor and to get the title deeds. We also reference the UK House Price Index and Price Paid Data to track the trend of house sales and prices. The data from HM Land Registry is then combined with property data provided by property professionals, alongside the automated data we provide for the Energy Performance Certificate and the council tax band. We also work with Veya to show their title insights and risk scores that help property professionals focus enquiries and to give a heads up of potential issues, ultimately reducing fall-throughs and speeding up transactions.’
What the Geovation programme did for us ‘We joined the Geovation Accelerator Programme in October 2020. Having access to this network and community during the peak of the COVID pandemic was especially helpful. Members of the Geovation team challenged our assumptions to craft a product that truly solves a problem. In addition, introductions to people within the industry helped us to get vital feedback, enabling us to improve the service before launch.’
Building partnerships and reducing stress ‘For a small team of three, we’ve already achieved a lot! Most importantly, we have powerful partnerships with LEAP, Thirdfort, Veya, Search Acumen, AnyVan and Rhino Home Protect. Our partnerships have allowed us to create a central platform for property data and updates which was previously siloed between different systems and stakeholders.
This data is infinitely more useful when shared – conveyancers can be instructed sooner and complete enquiries faster with the upfront property information collected, meaning there is less of a delay after the offer has been accepted. Estate agents can also track progress in the same place. By bringing everything onto one platform, there is no need to waste time finding folders, remembering passwords or having too many tabs open! We also hope to see this reduce the stress levels for property professionals.’
What’s next? ‘We’re about to announce our partnership with Just Move In – the home moving experts, handling removals and changing your utilities. We’re implementing version 2 of the BASPI (Buying and Selling Property Information) form created by the Home Buying and Selling Group. This aligns to the Property Data Trust Framework that standardises the format property data is shared in.’
‘Collecting this upfront property information helps to speed up property transactions by up to four weeks and reduces fall-throughs significantly as potential buyers know more at the point of making an offer. We’re continuing to develop our system with more integrations with case management systems and fellow PropTech providers, most recently with fellow Geovation alumni Veya. We will continue to collaborate with industry bodies and clients to refine and develop new features in our quest to make moving home easier for all.’
Andrew Stanton Executive Editor – moving property and proptech forward. PropTech-X
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