Latest Data Evolution and the Property Market – [FULL INTERVIEW]

0:03
So hi, everyone, I’m here with Paul Rout again. He’s the SVP and know when fresh and refresher in the Property Data and Data supermarket kind of area. So Paul, thanks very much for joining me. Good to see you again. Yeah, no problem. Chris could see us. Since we last spoke. I mean, it’s been a lot going on, I suppose with the with the economy and everything, right. I mean, what what kind of things? Are you kind of seeing? Yeah, so we are seeing a lot, I guess there’s, there’s, there’s a property market elements, which is all about the press, which I think they get get a little bit wrong. Record listings for the last couple of years back to 2018. Not as many sales, they’re sort of down. So let’s talk about that. I guess more concerning for people in the marketplace is the fact that there’s a shortage of rental properties, they’re really down and where they’ve been, since 2018. Other things, though, you know, specifically, specifically, sort of client and market orientated. And we’re sort of saying people are looking for more automation, particularly in the mortgage market. I think that sort of competition platform at the moment there is about how quickly they can underwrite and how quickly they can complete our mortgages. So now we’ve always got data as a service offering. So we sort of right right in there at the moment. Yeah, what’s what’s so what’s the the housing markets was, we’re all eyes on that. I mean, we’ve had interest rate rises that have been happening. And another one, another one happened this week, interest rates are going up, we got people on the right three year fixed mortgages. So third of people come off every single, every single year. I mean, what’s your what’s your prediction? I suppose the interplay between interest rates and mortgage rates, and I suppose then the mortgage property values as well, because they’re kind of interlinked, aren’t they? I mean, what do you think is gonna happen?

1:43
I wouldn’t, I’m not soothsayer, or anywhere near the interest rate doesn’t look like it’s as severe as it could have been talking about things like last night on the news about it peaking around four and a half, maybe even where we are at the moment. I think from a pricing perspective, it’ll be a bit more of a complex market. I guess, this is the frustrating thing with the, with the sort of journalists that the press really about, you know, 10% a year and 15%. There, I don’t think it’s going to be that severe in the marketplace. But I think what you’ll see a lot more of is probably the emergence of sort of pockets. So based on geography and attributes of property, I mean, specifically, I can talk about where I live at the moment, in terms of, you know, four bed plus properties, absolute shortage in the entire county, I think there’s only we only are a small county, in fact, the smallest, there’s only like three properties on the market. So it’s going to be by base towards that. But it’d be interesting to see if, I guess consumers stick to the guns on the prices as well. So, you know, I wouldn’t expect probably more than a, you know, seven to 10% cut in house prices. But to be fair, they were overcooked anyway, in this last last sort of year, so they’re probably going to level out where they actually should be. Do you think there’ll be moderate us as the actual pure absolute value house price will be moderated with inflation, right. So if we’re seeing, like, significant inflation than it actually in real terms, the house price goes down a little bit, even though the actual value might not go down a bit? Do you think we’re gonna see a bit of that a bit? Like the 70s? Yeah, no, I think so. No, I think I think you’re right on that. But I mean, I guess what we’ve seen with inflation, so far, prices have still been rising. I think that started to sort of sit down a little bit now. But again, nowhere as severe as they were. So I think again, it’s more the themes are balancing piece, I think I think it will balance out. Yeah, well, what about the Split button, I suppose that a lot of people were sort of moving out into big houses in the countryside, I suppose it was from from from London during the pandemic, and there’s a little bit of, I’ve heard a little bit of sort of, like people sort of moving back to the softening of the really rural market and sort of maybe maybe a little bit sort of like people moving back into cities and more sort of commuter belts. Are you seeing any is anything like that? And I think I think that’s definitely the case, I think we’ve probably because of the inflation, where it’s sort of been, I mean, the housing inflation, where it’s been, really is that people have done that. And then the number of houses that came on the market, because then he knew that the pre was a lot of people sort of moved up from London where we are because community is relatively commutable. And it’s not the the sort of prices that you’d expect. But that’s definitely softening. Now, without a doubt, I think there’s not that there’s not as many properties available and that nobody’s taking advantage of it. But that was an artificial element, I think of that of that sort of rise. Look, it’s going to hell. Do you think we all moved out of out of out of London too quick, and maybe the reality?

4:16
What do you think? Maybe, but it did. I mean, did it rebalance some of the rural areas? I think if you go north of London, yeah, it’s probably it’s probably sort of reindex those in terms of the house price and so so there was a our answers come out of this. But I think the other problem that happened as well, obviously, with the strikes and the rail, and everything that’s going on at the moment, while working from home, obviously, but people are starting to need more access into London. And, you know, it’s a lot more difficult if you live in, you know, an hour and a half out. Yeah, why do you can’t I mean, driving is pretty prohibitive, isn’t

4:49
it? What’s the answer one of the one of the dynamics that that happens when I suppose that the purchase market and then the rental market, you’re saying this, like you know, the rental market?

4:58
Listings perspective, I think I mean,

5:00
So maturity around the rental market at the moment, because I think now there’s various sort of government sort of sort of callings out there at the moment around what they may be doing with the rental market. I know a lot of local authorities, as well are extending things like HMO schemes into selective areas. So effectively, that’s becoming more like a licencing scheme if you rent rather than rather than anything else, obviously, a focus because of housing conditions, there’s a big drive in the local authority environment from Central Government for housing conditions at the moment, that’s probably putting people off in terms of the rental. And then I guess the final thing is the EPC element of it as well as that there’s a I think it’s an email isn’t you can’t have a an efficiency rating eel, ALS, or you can’t. Yeah, and it works from both sides of funding point of view. So BTL mortgages are being issued to people who haven’t, haven’t done the work or got that the houses of the thing, but also the restrictions by local authorities there. I mean, they are taking data for all SIPC at the moment and surely going around those properties and seems to have been rented. And how do you look at that I know some of the stuff that you do in terms of like, looking at things, either from satellites, or looking at like the property data? I mean, how can you sort of tell from, from from an almost like an energy efficiency point of view, is that something that we can use? Yeah, and to really understand their own efficiencies and energy efficiency. From that point of view, we’ve got a couple of elements that we look at, there is the standard EPC piece, which is the data so we hold all the data that the current and the potential but all survey information. So there’s around 16 17 million EPC surveys that have been done, and we’ve just got that data. A second thing is, is that we’ve got access to emissions as well. So we can actually see from satellite, what the emissions are from each property in the UK. And we’re just folding that in at the moment sort of view of that, so surveyed a non surveyed and what we’re what we’re what we’re actually doing is looking at properties that have not been surveyed in terms of the EPC. And looking at the emissions, and we’re doing a comparative analysis to see if we can allocate an EPC rating for a property that hasn’t got one at the moment. And obviously, the typology the property, the attributes, we can we can work that through. So yeah, there’s a big there’s a big push on things like that councils for the private sector and the mortgage sector really, really, really looking at an emissions you means for like, like infrared emissions or those kind of kids. Yeah, kids, that kind of thing as well. You know, there’s calculations which turn that into, you know, also how much energy you’re burning? What’s the emissions in that thing? How efficient are you, etc, etc. So we sort of sort of using that thing. But I guess the other aspect of it as well is a lot of interest in green mortgages. At the moment, I think Lloyds have just done a deal with octopus energy heavily around property. So that’s probably the other key theme in the mortgage market, the moment is green, green, the links with that energy cost is a big driver of inflation recently, isn’t it as well. So it’s a lot more we can do on that. See things for like the mortgage, the the the, the property market is probably going to soften a little bit, but maybe not quite as much as we think and maybe like maybe the raise market, there are the there is volume is maybe not quite as bad as you think. Is that that kind of what you’re thinking?

7:59
I think, yeah, people are gonna sit tight. I think, you know, you think about it, as I was calling the delinquency cascade, you know, your house is the last thing Oh, usually, isn’t it? So I don’t think we’ll see a lot of secured. Certainly collectors, I think the lighter stuff, definitely. Yeah. You know, from from, from the work we do in the collections market with, you know, the CPAs and the like, and some of the special services, definitely expecting, I wouldn’t call it a tidal wave, but a wave of some sorts in terms of in terms of in terms of collections activity. But I think the interesting thing is as well, I mean, you probably know, this, Chris haven’t experienced the market, it’s usually all about purchase or new debt. And that’s what they’re interested, there’s a lot more focus on the existing portfolio at the moment. So things like flight risk, and you know, our people moving changed circumstances, pressures on standards cost of living, that there’s a lot of more concern about people’s ability to keep up payment plans and things like that. So one of the big changes we’re seeing now is the fact that

8:56
it’s kind of we don’t have stability, we’ve had like stability for the last sort of, like 20 years, or even even maybe a little bit long, about 30 years in terms of like the data. So like, you know, inflation wasn’t particularly big, you know, there wasn’t a lot of sort of changes in different categories of spending those things, it just feels like the last sort of six months. That’s, that’s sort of like, that’s one of the things that’s really changed. And I suppose the question is like, how do we use that to understand things like affordability? Or how do we understand financial stress on on consumers? And, you know, we were chatting a little bit about suppose new sources of information, be able to do that, because it doesn’t feel like it’s a stable market quite the way it has been in some of the norms we had before. Don’t feel like that’s, that’s where we are today. No, no, I mean, there’s, you know, there’s obviously people’s ability to pay and, you know, there’s plenty of organisations around their record on that. I think, where we sort of looked at it, it’s probably the it’s the area, the type of property that you live in the amount that you’re paying for that property, you know, the Madson levels of rents, whether it’s institutional social housing, if it’s an HMO, they’re the kind of sort of I guess

10:00
pieces of data were put in into sort of gradings at the moment. And, you know, it’s quite interesting actually, because it’s, it’s, it’s the whole sort of multi use landscape of data. So vulnerability, and then that got the sort of sort of pieces come out of the back of sort of HMO, but we’ve been using our fellow with local authorities, by to let we’ve been checking on that central government for for a couple of years now. And it’s interesting, I can swap it out into sort of other other sort of areas. Really? Yeah. Do you think you’d estimate people’s energy bills based on on where they live? Which then might be indicative of affordability? I mean, those those kinds of linkages, isn’t it? Absolutely. Yeah. I mean, you know, rent paid. I mean, we do we do a lot of work with central government,

10:40
on some fraud aspects, which do use some of our sort of rental information and things for some of the benefits that they do.

10:47
And, ya know, very much so it’s really indicative. But also, there’s a lot of tricks out in the marketplace, people out there sort of keep the data as well, but I will the standard data sources. So but with property data, I think, I think that the thing with property later, I’ve probably said this before is most of the stuff we collect isn’t declared by a consumer. You know, it’s part of a process, a rental process, a conveyancing process, a survey, you know, or it’s, you know, it’s it’s photographed from space, for example. So, you know, there’s very little room to change any of those aspects. When it feels like that the data is one of the things that people seem to be looking at now. I mean, I’ve had quite a few conversations around data, in terms like how to get more data, how do you get faster? How do you get new sources of information that’s maybe different from the way it was before? I mean, are you seeing that kind of trend? I mean, you’re in the sort of like the

11:40
it’s not really new information. We’re in the new information space as far as as far as we’re concerned, right. I mean, yeah, stuff we haven’t seen before. I mean, people look into that. nowadays. I mean, I think he’s what I said, sort of opening really sort of speed a data availability, sort of regroup recent, frequent, fresh. So what I said about the mortgage market is they’re looking to speed up the process of getting that mortgage yet. It’s all slowed it down. It’s conveyancing, but also the underwriting of the property. That’s where that data is coming in. Now we can do it real time. It’s extremely fresh. So yeah, but that’s, that’s really a key thing, I think away from the property market. I’ll go back to the HMO information. I mean, that’s another sort of key point on that is, is that’s new data, which is coming in there in we’ve moved from producing a model for HMO to actually getting real data where it’s been surveyed by a rather large, large postal postal operation, where we understand what what is multiple occupancy. But I guess the other side of that, again, is, I suppose it does call out to the sort of recency, frequency freshness, a data is the whole trace process and the collector collections market, we’re seeing more preemptive work being done. So we obviously take transactions, movers information, people are looking at flight risk now, rather than sort of trace. And we’ve had some really good results in the utilities market, in terms of final billing, and sort of arrears, where we’ve seen, you know, a 20 times uplift on their sort of collections rates and collectors rate rates and final billing points as well, by using where typically they’ve been not been paid and been chasing it through the traditional mechanism of trace and all usual kind of thing. So I think it’s the awareness that data being available, but the availability of that data, I think there’s more and more transactional information from our perspective, both, I guess, both in the market, but also in the property area, which would sort of serves all these markets. Yeah. I mean, how do you how do you find in terms of clients, being able to process this information is one of the challenges you kind of have you all heard, there’s so much information out there, we saw this with, with open banking, right, which is, you know, we’ve had credit bureaus been around for a long time. I know, you know, that well. And then we’ve had,

13:45
you know, open banking that’s come through, there’s a whole slew of information come from that. Now we’re getting property information, we’re getting, like extra demographic information, those kind of things. It’s like, it’s like, it’s keeps, like it’s ever increasing. What How did how do you find in terms of like, clients be able to process it all? And almost like, find the nuggets of gold that are really indicative? I mean, what’s what’s what do you think is the best approach? So I think we’ve probably done more and more aggregation of data into sort of, you know, I guess scores and, and rag status is then we’ve we’ve sort of ever done so we are doing some of the heavy lifting on that, I guess, in the parlour heavy lifting is that we didn’t see many things. We got API’s and batch. But we’ve probably built more, I guess, what would you call monitoring based systems and trigger based systems for people. So we are holding at address level because we can do it information on properties for utilities, companies, whatever, and we’re trickling out triggering out when the event happens. So as soon as the Refresh is out on that day, and it’s sort of done. The other way of looking at this, I’m just working with a company. We’re just starting up a property fraud service, across insurance and also to the consumers as well. But then there is there’s literally, you know, as soon as you register it’s of the polling. We’re driving things with API so people can service their own thing on a dashboard. They get alerts now you

15:00
And I think it’s a, it’s a, it’s a shared problem I would say is probably the easiest way of doing it is I think there’s, there’s real results around it in terms of, you know, the traditional stack of data that they’ve got, I think it’s relatively easy to manage, I think we’re quite fortunate because we only have half of the matching to do because we do it on address level, we don’t need the consumer information. So it’s quite hard for me to comment, I think, on the other other consumers. It sounds like was, we’re getting all this extra data, but it’s almost like for us humans, for us to be able to digest it is that that trigger stuff is really is really

15:32
trying to make it simple, I suppose for the end user. And I think for us, it’s black and white, if somebody’s moving, or they’re not moving, the house is worth X, or it’s worth y. And it’s got an environmental problem. So you’re going to underwrite it. So this is real data. So there’s no real level of interpretation. We, we we typically in the mortgage market, we take,

15:54
and institutions lend lending policy rules, and their policy rules contain an element of property policy. Yeah, we don’t have things we’d want it break, and we won’t have them in these areas and this kind of thing. And all we’re doing is it’s taking that information running against the data, we split that data back out for them, but we actually made the decision for them as well. Is it a yes or no? Does it need to go for a full survey? Or can it be passed through on the green lane channel? Fully automated? It’s relatively simple. I think it’s, I mean, there’s trust there to do it. Isn’t that a thing? I mean, that’s part and parcel. But I think there’s, there’s less and less interpretation needed because of the data that well, especially the weed that was out there was black and white, it’s either real or yes or no real? Or

16:37
did you sort of treat that as almost like, well, there? Here’s the trigger, and it should trigger a manual investigation versus versus, you know, versus a No, I mean, it’s obviously yes. As a yes. Right. And that’s the rest of the company kind of takes, but if it’s an if it’s a no the trigger for now, that typically results in a manual kind of review. Well, interesting. We were just working with a new partner that we’re just working with at the moment, which I think you know, anyway, but it’s around the AI and E space. But what we’re looking at at the moment is we obviously have a trigger, which is somebody’s moving, you think about the collections market, for example, we can trigger the fact that something needs to be done, I in this case income and expenditure survey. So we will trigger what is a piece of software which automates that and does that. And all the clients will see at the end is a brand new I and II or a new payment payment plan in place. So actually walk in through that that thing at the moment. So obviously loads operators, loads of collectors, whatever they do, but there’s there could be this, this other sort of overarching piece, which is people just constantly risk of moving risk of change of circumstances. And that’s just generating the whole time. So it’s hitting the regulatory thing, but it’s also maintaining the communication. And it’s highlighting the fact that these guys have a change of circumstance. Yeah, I kind of current interest in too late. So we’re in this sort of getting triggered. We’re trying to make it easier for humans to digest. And I suppose then, I got completely enamoured by the chat GPT exam.

18:05
Where do you think we’re gonna go in terms of all this information, this problem of having just like, almost like, unlimited amounts of information, and then being able to digest it down to those triggers? Do you think we’re going to be able to, to use to use the computers to be able to do that? I mean, is that is that where it’s going?

18:21
It probably will be able to, I think, obviously, the whole AI sort of bandwagon. But I think it’s more simple than that. I think there’s some pretty common sense, sort of sort of sorting that an individual can do. I mean, what for me, what is important change circumstance means new job, new move, whatever, whatever, whatever. There’s real data on all this stuff out there. Yeah. So why wouldn’t you just prioritise that use over a few models and things that are going on? Yeah, honestly, you’ve got different layers. Have you got that the obvious ones, then you got the next level ones, the experts? And I suppose we’re probably saying we probably still haven’t on the basic ones. Right. So there’s a lot of basic ones we need to do with some of the data. Absolutely. But that is the bizarre thing about it all is that the some of the basic fundamental triggers, which significantly change an individual’s

19:05
sort of life or behaviours, and whatever nobody’s looking at at all. It’s really strange. I mean, if I was, I’d be looking for employment data out there. If I could find, you know, when somebody’s employed, when somebody’s not employed, I guess open banking is a route to do that from an income point of view. But that would be a key trigger for me, because that’s, you know, that’s that’s your that’s your cash flow, isn’t it? So many moving house, I’ll be spending more of the spending net less of the coming to sort of money equity and that kind of thing. Really big trigger. Yeah. But also from a contact point of view as well, massive trigger of somebody’s moving, but, you know, people are only just beginning to sort of clock onto that. But I think it’s a blend of property day has been used in the property market, for example, and nowhere else. I think now, we’re we’re pushing across other markets, and it’s due to people’s experience in our business and whatever. But we’re beginning to see sort of multi use for the data. And I think people say, oh, did we get it every time? I didn’t realise that was out there. Yeah, yeah. And I suppose How much do you think we’re

20:00
are over reliant on the machines to do the interpretation for us versus almost like that human centric kind of kind of thinking around extracting the data, because it’s almost like the idea is to come up with, like the fact that you might have lost your job, or you might have, you might be in this particular situation, or this kind of scenario might happen from a housing point of view. I mean, do we need to overlay more sort of like, human driven? I think, I think there’s understanding psychology, right? Yeah, there’s an emotional element to anything, isn’t it? Which I don’t think machines can interpret? I think that’s absolutely right. I think I was thinking things in the process by thinking, what would I do? Or how would I behave? What the route that I would go down and try and overlay that into the, into the business situation that we’re sort of looking at at the moment? And that usually, usually gives you the outcomes and the sort of touch points that you need to consider? Yeah, yeah. That’s right. It’s very interesting. So where do you think we go from here in the back end of the year? I mean, what’s your what’s your looking your crystal ball?

20:53
Where do you think we get? Where do you think we’re gonna go? Is there gonna be like, the ball behind you with sort of, like, different shards everywhere? Yeah, I mean, probably, I think, I think a lot of it stems around what, what, what the government had to do and what the change is gonna do? I mean, if anything remains, you know, on a path without any major changes going on. I think that’s probably, you know, not upsetting the applecart, laissez faire, etc. Just like, just let it be. Mmm, I think we’ll be fine.

21:17
I just I just don’t know, because there’s so many twists and turns, I think we commented before, when we spoke,

21:24
then back in the last year, we would have had a very different conversation around sort of, you know, trust and everything about what was happening in the marketplace. And it’s not a great amount of time for the sort of series of changes that have happened. And we’ve seen gone in the markets. So yeah, I mean, I think I’d

21:41
I’d probably wait until the next interest rate rate rise or not, and see what’s happening. I think that’ll sort of dictate the way I think more concerned. And it’s probably the the economic growth of the globe that are and I think that’s where everything else starts to come out. And so I think that’s interested needs to be made with that. I mean, if you’re sitting there as a risk manager, I mean, what do you think the big the big five risks should be worried? Because we’ve talked about a lot of the risks. Now we’ve talked about environmental risks. We’ve talked about interest rate risks, we’re talking about credit risks, we’re talking about property. We’ve talked, we’ve talked about a lot, right? Yeah, you have you have quite a vision over over some of those in them. And what do you think the top five are that people should be worried about? I think that I mean, for me, I think there’s gonna be What’s it 2 million mortgages in the next 12 months, mortgage shots going to be a big one, I think that the thing that changes is the fact that it’s an increase, but it’s gonna be a rather large increase for most people. That’s why I’d be concerned about as affordability, I’ll be worried about the exposure to that affordability in terms of what I have with people.

22:37
What else would I be worried about?

22:41
What about the environmental aspect of new do quite a lot of that? I mean, I mean, that’s sort of been changing, I suppose it seems like it’s a slow boil almost in terms of like, increasing. So I know, we talked before about soil changes as an example we talked about, you know, and we were talking about energy, energy, energy leakages. We just talked about that now. I mean, do you think, how do you think that’s, that’s going to impact? I mean, is that just something that’s going to keep on going in the background? It’s almost like if it if it rises slowly, we don’t notice it? But actually is is a risk? That’s that’s, I mean, it’s to be honest, I think it’s it’s been, I guess, disguised to certain amount by political war things that are going on at the moment, Ukraine, and then that kind of thing. But I think there was a real need to do that before anyway,

23:25
people and I guess for me, there’s a blame isn’t there on that. And I think it’s too much of a blame about why energy costs are going up, they’re all just going to naturally happen anyway, because things become more scarce. So I think, to be honest, I think the Financial Services

23:40
community are

23:41
reacting to it, especially within the mobile space quite well, amongst they are looking for the sort of green element. They’re looking to remediate things like roof leakage, or whatever. They’re looking to help people and fund people’s new heating systems and solar and installation and that kind of thing. So it’s that’s going in the right direction. I don’t think it’s getting as much exposure as it should do, or as much encouragement by the government as it should do so that we can see more and more of that that sort of happening. Yeah. I guess the other thing is we we sort of think about is sort of new, old houses as well, I mean, there’s houses which are, you know, restricted in terms of how efficient they can be typically older, bigger, larger, and so so, I’d be interested in what kind of impact that has in the marketplace as well. We’re not talking about your 3 million pound mansions, which anybody can, can afford, but just generally older properties which are restricted on what you can do, protecting the rental market, when you’re looking at, say, some of the inner city rentals and thinking about to student days if you need to, you know, some of those Victorian terraced houses, you know, honestly, weren’t weren’t well insulated at the time. And you know, you know what, there’s only so much you can do with some of those as well. Yeah. Yeah. But it’s I mean, it’s the whole I mean, you look at the whole things and and technology at the moment, you’ve got it from a heating perspective or ground sorts of stuff. You can’t you can’t have them in flats, you can’t have them in terraced houses. They’ve got to go on you

25:00
All they produce a pretty much an ambient temperature thing. I don’t think they’re that great from, from what we’ve heard electric vehicles. I mean, you know, everybody’s getting pushed towards that terraced house in flats, how are you gonna? Are you gonna do it? There’s not the whole thing. So I don’t know, I think there’ll be a shift rethink towards things. I don’t think we’re quite where we shouldn’t be with everything at the moment. I think there needs to leave thinking. It’s a world of change, that’s for sure. Yeah.

25:25
So So Paul. Well, thank thanks very much. I appreciate it’s always good to get vivid insight on the property market as well outside of the environmental stuff as well, which you seem to have a pretty good handle on and be good to look at longer term trends, because you probably get to see some of those things as well, too.

25:39
So it’s definitely definitely a concern. So but, but Paul, thanks very much for the insights really appreciate it. No problem.