They will be the doctors, lawyers, teachers, thinkers, leaders and captains of industry of the not too distant future, but is the property world ready for the tech-savvy, digital-dominated generations coming hot on the heels of Generation Y?
The older members of Generation Z – typically categorised as those born between the mid-1990s and the mid-2000s – are just starting to enter the workforce or in their final years of education, and are more in tune with tech, gadgets and social media platforms than any other demographic we’ve seen before.
And it’s likely that Generation Alpha – broadly defined as the first group of millennials’ children – will do things even more differently. Recent research carried out by Nationwide found, for example, that many primary school pupils are strangers to the high street.
Half of five to 11-year olds have never been to a launderette, 44% have never visited a florist, 41% have never been to a shoe repair shop, a third have never visited a butchers and a quarter have never set foot inside a greengrocers.
The poll of 2,000 primary school age children also revealed that more than one in ten (13%) have never been to a bank or building society. Meanwhile, three quarters said their food usually comes from a large, off-high street supermarket, while two-fifths said their parents shop online. In London, half of children’s families shopped online, the Nationwide research found.
All of which suggests shopping habits are changing for the newest generation, with the high street potentially declining further once this generation and the ones after it reach adulthood.
Generation Alpha, even more than Generation Z, will date, shop, bank, order food and search for property online. Generation Z might be known as the iPhone, Instagram and Snapchat generation, but the generation after it has grown up completely exposed to and consumed by new tech, AI, digital innovations and a world living firmly online.
The young of today are likely to be perplexed at the idea of travel agents, landlines, disposable cameras and paying by cheque. They will grow up in a world where cash and paper are less apparent, where many more things are hands-free and wireless, where electric cars are the norm, and where doing things interactively is far more ordinary.
Could they, as a result, find some of the more traditional elements of agency – such as For Sale/To Let boards, newspaper advertising and leaflet drops – a tad archaic? Are hubs, which have become increasingly popular in recent years, the future? Or maybe the sort of Market Centres proposed by an agency like Keller Williams?
Embracing the hybrid model?
As this excellent feature on Estate Agent Today, written by love2move founder Georgina Cox, recently outlined, disruption in estate agency does not equal extinction for traditional models.
In other words, a move towards more online services – such as VR tours, interactive touch screens and online customer portals – is part of the natural evolution of agency as it seeks to move with the times and appeal to younger generations.
The recent TwentyCi Property and Homemove Report for the second quarter of 2019 backs up why a different approach to the younger generations might be needed, with online agencies enjoying a 1.7% growth in their market share for properties priced under £200,000, the bracket typically containing first-time sellers. Younger, first-time sellers often find an online service appealing, for the flexibility and control it offers.
At the same time, the survey also reiterated the importance of a strong high street-based agency market, with traditional companies eroding online agents’ market share in the £350,000 to £1 million and £1million-plus property brackets by 12.95% and 10.1% respectively.
At present, the vast majority of property transactions are done in the traditional manner, albeit with the helping hand of technology, in the form of portals, websites and various online applications.
But is the demand for high street operations still there, is the footfall still high enough? If it isn’t there now, it seems unlikely it’ll be there in the future as Generation Z, Alpha and beyond become the buyers, tenants, landlords and sellers.
As I’ve said before, I think we’ll see a move towards a hybrid model being the dominant party. But let me be clear – that doesn’t include the likes of Purplebricks and Yopa in their current form. They are not hybrids because they don’t have fixed branches or offer the support systems, structures, sales progression and face-to-face communication that a traditional agency offers. A hybrid is one that genuinely offers the best of online and traditional merged together in a flawless manner.
Many agents would already argue they have embraced the online revolution – with social media profiles, websites and a presence on the portals. Many, too, have embraced the innovations offered by the rapid growth of PropTech. But for an increasingly digital population, they might need to go further – app-friendly, new-tech friendly, greater use of things like VR and AI, etc.
The recent digitisation programme carried out by HM Land Registry, and the increasingly online nature of many banks and building societies – with a huge growth of millennial-friendly digital-only banks such as Monzo, Starling and Atom – suggests that all of life, including property, will be more digital than ever moving forward.
Reasons to be hopeful
Despite the above, there is still plenty of evidence to suggest that high-street agencies will continue to thrive. We now live in an incredibly digital world, as much as it’s ever been in human history, but the robots haven’t taken over just yet and the market share of online agents is only tiny. Of this, Purplebricks is responsible for most of it.
This suggests people trust and very much still want to use traditional high-street agents. This piece I did a few years ago examined how agency is bucking the high street downturn. Look around you, it’s not agencies closing down or scaling back their number of branches.
Agency was one of the few areas that thrived after the global financial crisis and has largely kept this up since, despite all the challenges posed by Brexit, political and economic uncertainty, higher rents and a general decline in high-street footfall. Brexit hasn’t affected agency in a way that many smaller businesses (especially those reliant on easy trade with the EU) have been impacted, paralysed by the chronic uncertainty.
There’s an argument that we’ve now reached peak estate agent, with an oversaturation of branches, but there must be the demand there otherwise they’d all be going the way of their high street counterparts.
There is also the argument, too, that property is one of the areas of life where people still prefer that face-to-face communication and something live, visceral and tangible. Most people still want to see the home they are going to buy or rent in the flesh; many like to be shown round by an agent or the seller/landlord.
There seems absolutely no doubt that Generation Z, Alpha and beyond will do things differently – and the industry will become more digital and online than it’s ever been – but the desire for the human touch, for the trust and intimacy that a major life decision/purchase requires, will also remain too. Traditional agency should continue to thrive, as long as agents move with the times, evolve and see innovation and new tech as something to be embraced, rather than feared.
It might also be worth agents’ while planning ahead for future generations, to ensure they are ready when Generation Alpha start renting, buying, selling and letting homes – which could be as early as the 2030s.
A roadshow highlighting opportunities for estate agents
Quick shout-out to Richard Rawlings and the launch, in early September, of his latest roadshow – sponsored by ValPal and LeadHub - in support of agents who wish to explore the opportunities currently on offer, even in these seemingly troubled times (the tenancy fee ban, Brexit confusion, a stalling market).
“Magnetic Agency - Persuasive Pitching - Higher Fees”, which focuses on helping agents attract and secure saleable stock at improved commission levels, launches in Warrington on September 3 and tours 16 other UK venues during the autumn.
It will also explore the psychology of persuasion and the science behind effective valuation.
“Anyone currently charging less than 2% will find this immediately useful,” Rawlings says.
For more information you can visit: www.RawlingsRoadshow.co.uk. Craig Vile, Director of The ValPal Network, will be attending and presenting at a number of the roadshows and so we’ll be providing an update in the Natter from each of these.
This EAT story from earlier in the week explains more.
Until next time…
*Nat Daniels is the Chief Executive Officer of Angels Media, publishers of Estate Agent Today and Letting Agent Today. Follow him on Twitter @NatDaniels.