Innovation is change that unlocks new value
The recent budget announcement to introduce an additional tax requirement for banks with liabilities above $100 million has once again raised the question of whether the dominance of the big four is good for the Australian economy. Let’s leave the specifics of that to others to debate, but what is well accepted is that competition breeds innovation and, for users, that is invariably a good thing.
As an example, we have all seen how Uber has already radically changed the passenger transport landscape, not because it is cheaper or just different, but because it’s better. After griping about the fairness of its positioning for some time, incumbent taxi companies have now realised they were not serving their customers well and have started to address this with better apps and easier payment methods which has improved the overall level of service and led to increased value for customers.
However, in Australia’s most valuable market place – residential property – the battle to capture the hearts, minds and, ultimately, the pockets of consumers still rages on. Portals, agents, lenders, brokers, FinTechs and service providers are clambering for a share of this very large pie; flooding the market with data pertaining to market movements, previous sales and area descriptions. But has the ability to purchase a property with confidence actually improved, or is the market now suffering from information overload and more of the same?
Consumers across the country still regularly attend auctions and/or make bids for properties hoping that lenders will see the worth of their property through a similar lens. However, many are left disappointed to subsequently learn that all the advice and information they had painstakingly collated prior, was not what was important and the assessment of the property’s value was based on something different. This is partly due to the systems used to facilitate a valuation; the templates used to complete it and the data used to support it, has remained relatively unchanged for many years. In addition, while industry standardisation has, no doubt, lead to efficiency, it has not encouraged market competition or differentiation in this space.
In this digital and data-driven age, and at the time where we are finally realising that the consumer truly is king; how can the mortgage valuation process still be seen as more ‘art’ than ‘science’, and why is the consumer often the least informed member of the increasingly long chain of participants in the home buying process?
Despite many new players entering the property market in many areas, there has been a lack of true innovation with respect to the assessment of the value of a residential dwelling. Physical valuations and automated valuation models both rely heavily on the previous sale of similar properties and/or the general change in values across the regional market. But how reliable is this for the unique property in question? How should it be interpreted and how valuable are historic trends for consumers (and indeed lenders) who need to be looking forward. One of the obvious, yet still innovative ways to measure appeal would be to understand how long the property has been on the market, how many other people are interested in it, and to what extent has their interest developed?
Capability exists today to capture, digest and use a much broader array of information and at Valocity we are focused on truly empowering all members of the property ecosystem. This can be done by gathering unique data; leveraging advanced analytics, understanding its relevance; translating it into meaningful insights and facilitating this journey of understanding through a digital platform which is flexible and dynamic enough to support it. Such innovation will ultimately deliver a much more informed and relevant experience to all participants, which provides the right information, at the right time, in the right way.
In summary, the current disjointed, single point in time, generic ‘one-size-fits-all’ approach to understanding a property’s value does not align with buyer sentiment, the data and/or analytics readily available today and growing customer demand for transparency as we embrace the digital age. As properties move along the sale process, so too should the market’s understanding of potential value; aided by information supplied by all participants in the process. Insights should emerge from the data and be shared and built upon by all members of the ecosystem to build valuable knowledge and confidence. That way no-one ends up surprised or disappointed at the end of an often-arduous home buying journey.
NIGEL BUTLER, COUNTRY HEAD, AUSTRALIA