If Challenges Exist, Take the Opportunities
The landscape for residential sales jobs and lettings negotiator jobs has rarely been more confusing. Challenges range from affordability to politics, with each casting its own cloud on the outlook for the sector. While some of these challenges are impacting the industry today, there are also issues which are in the background but likely to become more prominent in the future. Despite the uncertainty that these issues cause, the future is bright for those companies and professionals who meet these challenges head on.
We have been operating in a low interest rate environment for several years, and it is only recently that central banks have been inclined to raise base rates. Even so, the rises have thus far been muted, and it seems increasingly likely that we may be at a lull in interest rate moves. Global economic growth is expected to slow over the next two years. Inflation appears to have peaked and is retreating – the January CPI number in the UK came in below the Bank of England’s target rate of 2%.
Higher interest rates can cause pain to developers, buyers of residential property, and the consumer generally. The uncertainty surrounding the economy and the value of the pound because of Brexit may cause a pull-push on interest rates. With a lack of clarity, vigilance is required when budgeting.
Political & Economic Uncertainty
Perhaps the most pressing challenge for most at this moment is the huge amount of political and economic uncertainty. From Brexit to US/China trade tensions, to the Yellow Jacket movement in France, and the rise of populist parties around the globe, we are facing uncertain times.
In addition, the monetary easing that has taken place since the Global Financial Crisis has largely been halted. The massive QE that was released by the Fed and the ECB in particular has been withdrawn. Undoubtedly this has decelerated the global economy, perhaps more so in the eurozone than elsewhere. However, while such uncertainty may dampen activity in the short term, people will still need homes in which to live. Buyers and renters need help to find their ideal home. If the political and economic uncertainties are traversed successfully, we could see pent up demand released.
Financing of Development
Banks and traditional lenders have become more reticent to finance new developments. This can be problematic and may be a contributary cause in the inability of the UK to build the number of new homes the government is targeting.
However, this has also pushed developers and housebuilders to be more creative; for example, by greater use of crowdfunding and alternative borrowing such as issuance of loan notes.
Negative wage growth in real terms coupled with rapidly rising house prices has caused affordability issues for would-be homebuyers. The imbalance between supply and demand has exacerbated this situation.
In recent months, as general inflation has fallen back and the labour market has become stretched, wages have begun to grow in real terms. At the last measurement, wages in the UK increased by 3.4% – almost double the rate of inflation. This should help to ease affordability issues, though there is clearly a long journey before the gap is normalised.
AI, Digitisation and Ecommerce
One of the biggest influencers on jobs search
and how we do things in the future is likely to be AI, digitisation and ecommerce.
We’re beginning to see the full effect of ecommerce: high streets are having to change focus to survive, as retailers feel the winds of change caused by the consumer shift to online retailers. However, this is creating opportunity for developers to create more city centre residential that appeals to homebuyers and tenants who wish to live near to where they work and play.
AI and digitisation will undoubtedly change how the residential sales and lettings market operates. While this will be challenging in the near-term, those who embrace this change and develop the skillsets required in the new environment are likely to benefit from new opportunities in a more connected world.
Increasing Regulation & Tax Changes In Buy-To-Let
Over the last three years, the government has introduced several regulatory and tax changes that have made buy-to-let investment less attractive. Increases in stamp duty to a reduction in the tax relief available on buy-to-let mortgage interest and tougher regulations on landlords have served to dampen demand from property investors.
Of course, the biggest challenge facing real estate agents, developers and housebuilders is selling houses. In December 2018, residential transaction volumes were down by 2.9% compared to a year earlier, though the annual number of transactions rose for the first time since 2015/16 (1.208 million vs 1.158 million in 2016/17 and 1.328 million in 2015/16)
Traditional estate agents are feeling the effects of online sales tactics, and the market is suffering from all the above challenges. However, where challenges exist, so do opportunities. Residential sales and lettings professionals who invest in themselves, develop their skills for an evolving market will continue to be in demand, because those property management and real estate development companies that employ the best residential sales professionals are likely to benefit from higher sales than their competitors.
To benefit from a confidential discussion about the opportunities in residential sales and lettings in construction, contact our specialist lettings recruitment team today & connect with us on LinkedIn.