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Unlocking the Residential Market During a Lockdown

Wednesday 1 April 2020 Property Development

Thomas Fletcher-Wilson's picture
By Thomas Fletcher-Wilson

Unlocking the Residential Market During a Lockdown

The government has recently urged people not to move homes to try and limit the spread of corona virus. Although the effects of the current lockdown and how long it will last are relatively unknown, we can infer that the market will be affected in a negative way. With a focus on the residential property market how on earth can we turn this massively negative situation and produce some positives?

Like many others I have spent the past week or so adapting to a completely different lifestyle. I no longer have to travel to work, I am finding time to complete tasks using different approaches, I can’t go to the pub on the weekend, I am planning ahead more thoroughly – shopping, finances and assets.

The current situation has been a shock to the system for all of us. I haven’t been in contact with anyone who can say they have not been affected by the virus and the implications it has had on us. As individuals our lives have changed drastically but on a larger scale, businesses have also been massively impacted by the current affairs.

Using Liverpool as an example we have analysed the area to provide information on how better customer insight can enable the residential property market to soldier on and plan for when business resumes to something resembling normality.

 

Working From Home

At first, I was really looking forward to being able to work from home. The benefits included not having to walk to the tube in the rain, the tube itself and potentially a bit more flexibility from work. The downsides quickly made themselves apparent though. I realised how claustrophobic a small flat in Battersea could actually be, I wished I’d got my new glasses before having to do every interaction staring at a screen and to top it off, I wished I hadn’t binge watched so many Netflix series pre-virus.

So, what are the takeaways from this that we can use to our advantage?

Everyone is at home and will be for months. This is a perfect time to engage with people who may ordinarily have tossed your marketing material aside. We are all craving interaction so why not use this opportunity to engage with our customers in an effective manner. This is not a call to bombard your customers or enquiries with emails. Tailor your approach to customers to receive a response. This may not be for the next few months it might not be for a year. But there are many of us out there (including myself) who wish they had a more secure living situation instead of renting. I might also add that I hope there is never a situation like this again in my lifetime, but if there is, a larger living space would be greatly appreciated!

In between working or being at home, planning and implementing classes for children and trying not to panic too much, we generally have more time on our hands. I for one am paying more attention to gardening. Although I’m no Alan Titchmarsh some of the home improvement tasks I never had time to complete before are actually getting finished. For those that are looking to move on and sell their homes in the future, this situation has provided a perfect opportunity to make progress on making homes more presentable and adding value, large or small to their properties. Taking them one step closer to being able to hit the ground running when the opportunity arises.

 

Who Will Engage With Us Digitally?

The majority of the population are online a significantly longer amount than usual. There are two approaches to this. If you understand who is more digitally engaged and is likely to respond online, you might just see an increase in communication. For those who aren’t as engaged online, I’m sure they would respond a lot more positively to offline interaction such as a letter personally addressed to them. 

We are also all connected to landlines and phones. Why not set up some calls using online video or send voice notes to add that extra bit of human interaction we are all starting to miss.

Since we are all social distancing (hopefully) there has been a rise in virtual tours. What a great way to provide a unique perspective to your properties on the market. These could be personal tours or content sent out to the masses. Virtual museum tours and live streams of attractions such as the zoo are more popular than ever. I might not be expecting the Mona Lisa but I would definitely be more receptive to a virtual tour of my dream home. This isn’t suggesting I am in a position to buy right now or would make that decision. But when the time comes small actions like this will be remembered.

Referring back to the analysis provided in Liverpool we profiled the most affordable areas and found there was a higher propensity of certain types of people living within the catchments. Using our geodemographic segmentation Acorn, we can provide some insight into the propensity for those likely to respond to certain types of marketing channels.

 

Modest Means

These people own or rent smaller older terraced housing and flats, which often includes some of the least expensive housing in the area.  The mix of families is likely to include singles, couples with children and single parents and the age profile may tend to be younger than average.

Engagement - they have a higher propensity to respond to Internet adverts, TV or radio adverts and leaflets through their door or included in their newspaper.

 

 

Striving Families

These low-income families typically live on traditional low-rise estates. While many rent their homes from the council or housing association an equal number have bought their houses.

Engagement – Although not as digitally engaged as other segments ‘striving families’ do respond to leaflets, mail and mobile messages.

 

Executive Wealth

These are wealthy families living in larger detached or semi-detached properties either in the suburbs, the edge of towns or in semi-rural locations. While these are generally family areas there are also some empty nesters and better-off retired couples. Many families own their home, but a good number may still be repaying a mortgage. The likelihood of these families owning a second home, in the UK or abroad, is over five times the UK average.

Engagement – Their online behaviour is far higher than average. If we drill down into how they are likely to respond we find that the best methods would be cold or warm emails but also to newspaper, magazine adverts or custom magazine adverts. With this in mind, they’re significantly more likely to read the Telegraph and the Times.

 

Using This Time to Plan Where to Build and Who For

The market will slow down to some extent. This is going to be a reality. If you factor in self isolation, social distancing and unnecessary travel it is an inevitability that there will be less viewings resulting in fewer sales. This is an opportunity to focus on developing in the right place for the right people.

Being efficient and effective is critical in this climate. There is not much room for mistakes. Understanding the characteristics and behaviours of future customers is a must if you want to be efficient with developing and selling properties. Use this time to really get to know who out there is looking for what type of property.

In London just over £1bn in completed residential properties have not sold. 50% of properties are built to fit the profile of a home likely to be occupied by a City Sophisticates - but only 24% of the London population fall into the Acorn segment City Sophisticates.

When we get through this period many people will potentially have dipped into cash reserves. They may not have been ready to buy straight away but there will certainly be more of an emphasis on affordability.

Using data can help you target the right areas. Whether that is developing or sending the right messages to the right people to fill your properties.

 

Using CACI’s residential data the above map shows the most (blue) and least affordable (red) areas of Liverpool at Ward level. We have calculated this by combining our datasets such as:

Paycheck – a consistent and reliable gross household income estimates at full postcode level across the UK. Income reflected by Paycheck is gross household income from all sources including earnings, benefits and investments.

Streetvalue - property values for all individual residential postcodes in the UK, broken down further by property type.

The top 3 most affordable areas are:

  1. County
  2. Anfield
  3. Fazakerley

On the other hand, the least affordable areas in Liverpool are:

  1. Woolton
  2. Church
  3. Mossley Hill

Focusing on the most affordable County area:

  • There are 3,542 owned households and 1,674 privately renting showing lots of opportunity.
  • The mean income in this area (County) is £23,220, which is 20.7% below the base (Liverpool) average.
  • It contains 6,851 households in an area covering approximately 0.7 (sq miles), resulting in a household density of 9,312 households per square mile.

Throughout this blog we have evidenced:

  • Finding the areas with the most opportunity for developing households due to affordability.
  • What the predominant types of people in an area are and how they are likely to engage with us.
  • How people’s lifestyles have changed and what that means in terms of how their behaviours are likely to adapt

 

Conclusion

To summarise, this situation is serious and there is no quick fix. We have to be responsible and use this time effectively and be strategic in our planning.

Understanding who your customers are and more importantly what they want is more pertinent now than ever. We have lost the ability to qualify leads in person and also the slim margin of error we may once have allowed for. Use this time to think smart about your customers and how to best understand them.

 

For more information or to find out how CACI can help you better understand your customers, get in touch.

The government has recently urged people not to move homes to try and limit the spread of corona virus. Although the effects of the current lockdown and how long it will last are relatively unknown, we can infer that the market will be affected in a negative way. With a focus on the residential property market how on earth can we turn this massively negative situation and produce some positives?

Unlocking the Residential Market During a Lockdown