Tech transforming the world of property deals

Making real-time mortgage approvals and highly customised mortgage solutions accessible to all and not just for high-net-worth individuals could be a real game changer for the industry.
Making real-time mortgage approvals and highly customised mortgage solutions accessible to all and not just for high-net-worth individuals could be a real game changer for the industry.ST FILE PHOTO

Regulators and industry must work hand in hand to build customer knowledge and establish trust

Property purchasing is commonly seen as a painful process, littered with certain degrees of uncertainties.

Besides having to deal with multiple parties ranging from developers and real estate agents to lawyers and bankers, a property buyer has to plough through stacks of documents before a deal can be concluded.

As buyers demand greater control and transparency, it is not surprising that the real estate industry is ripe to face disruption.

Key to this is proptech (property technology), which is becoming the new fintech (financial technology), and is expected to bring about similar radical changes. In many respects it is already happening. Funding of disruptive proptech firms has grown phenomenally, from US$221 million in 2012 to over US$2 billion (S$2.7 billion) last year.

Without a doubt, the process of buying a home will change beyond recognition in the coming years. In Singapore, we are already starting to see the influence of proptech changing the way home buyers and sellers research, finance and transact.

According to HSBC's Beyond The Bricks home buying report, finding a property is already something that is largely done online, with almost 89 per cent of recent home owners looking for available properties online and 86 per cent searching online for house prices.

Property websites using technologies such as artificial intelligence (AI) and virtual reality (VR) will transform each stage of the home purchase process and deliver end-to-end services, including many of those traditionally offered by estate agents.

As virtual and augmented reality technologies mature and costs of adoption become lower, it is not unfathomable that buyers will be able to view potential properties in London to New York from the comfort of their homes.

In Singapore, established portals such as PropertyGuru and SRX Property are already leveraging such technologies, including the use of drones to market properties to local and overseas buyers.

However, while such technologies can provide an immersive virtual walk-through of a property and help speed up the shortlisting process, it cannot replace the need for an actual viewing given that there are other elements, including sound, scent and touch, that will come into play when deciding on a property. Well, at least not in the immediate future.

New technologies also have the potential to disrupt the property industry by making the purchase process much easier and reducing the number of people involved in a sale, giving buyers and sellers more control. We are already seeing the rise of online do-it-yourself platforms in Singapore.

Unlike established portals such as PropertyGuru and SRX Property, where listings are posted only by real estate agents, newer sites such as DirectHome and Snappyhouse allow home owners to market their properties and negotiate directly with buyers, and vice versa.

Most properties may eventually be transacted this way, with property websites offering end-to-end marketing, search, financing, negotiation, transaction and conveyancing services that significantly reduce the time and hassle for home sellers and buyers.

FINANCING PART OF DISRUPTION

HSBC's Trust In Technology report finds that banks and mortgage advisers remain the trusted source for mortgage advice, but an increasingly time-poor society is expecting banks to keep up with technological advances.

Again this is already happening in the property space. When it comes to property financing, 74 per cent of recent home buyers researched financing options online.

Banks are also beginning to explore how to streamline and automate the process of property financing, making instant home loan approval a reality.

Banks are also exploring how to retain the human touch while adopting digital communication through the use of live chat or video functions.

AI technology will make it faster and easier for banks to assess personal data which can be analysed against lending criteria, ensuring product solutions can be identified and approved almost instantly.

Making real-time mortgage approvals and highly customised mortgage solutions accessible to all and not just for high-net-worth individuals could be a real game changer for the industry.

However, the speed at which the digital revolution in home buying rolls out around the world will depend on local regulatory environment and people's willingness to trust technology for such an enormous purchase.

HSBC's Trust In Technology global survey points out that regulation plays a role in guaranteeing consumer faith in banks when introducing new technology, with 75 per cent saying it is essential or very important that new technology is independently regulated for security.

Similarly, for proptech to fully transform the way we buy property, regulators and the industry must work hand in hand to build customers' knowledge and establish trust in the technology.

After all, buying a property is an important milestone in life. For most, it is probably one of the most high-value items they will ever buy and should not to be taken lightly.

• The writer is head of customer value management, HSBC Bank (Singapore).

A version of this article appeared in the print edition of The Sunday Times on November 12, 2017, with the headline 'Tech transforming the world of property deals'. Print Edition | Subscribe