Property market update and Innovation in property with Jen Baird

The Relab team sit down with Jen Baird, CEO of The Real Estate Institute of New Zealand to talk about the current spring property market and how it compares to last year's statistics. 

Jen also talks us through how important data, technology and innovation are pivotal factors in the property market and the improvements she would like to see in the years to come.

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Transcript

0:56

Kia ora koutou and welcome to the property collective podcast brought to you by Relab. I'm your host, Stacey Fairclough content manager here at Relab. In today's episode I am joined by the insightful Jen Baird. Jen is the CEO at the Real Estate Institute of New Zealand or REINZ for short. Jen will be taking us through a quick property market update from September, 2022. Compared to September, 2021. And then we have an awesome chat about where she sees innovation, playing a role in the property industry. Let's get started

Stacey: 1:36

Cool. So we'll get into it. And Jen, can you start off by taking us through some of the most recent stats from R e I NZ and how the property market is tracking at the moment?

Jen: 1:49

Yeah, absolutely. I mean, I have got a lot to say about both of these topics today, so just interrupt me if I'm banging on a bit too much So interesting. Interesting comparison this spring. We do year on year comparisons and that means that we are comparing this spring to what was essentially a lockdown spring last year. So the numbers are what they are. Um, but let's have a bit of a chat about what they look like. So the median price across New Zealand in September was$811,000, and that is 2% more than this time last year. So we have seen those prices, the median price go up. Interesting though, when you take the Auckland numbers out of that. So New Zealand excluding Auckland, the median price has reduced. It's down just a smidge down to a. 0.7%. So we are absolutely not having these conversations that we were this time last year, about 25% increases. It is a very different market. Sales numbers are, have been slower all year, compared to September last year down 10%. But again, we're comparing to a month where it was, it was locked down, um, but twice as many properties on the market, and now, as in, compared to last year. But again, that is something that we have seen over the last few months, a real kinda in this new level in the property market.

Stacey: 3:13

Cool. Yeah, it's interesting. It's interesting to hear, see the difference from lockdown. Cause obviously that was crazy time. How do they compare to the first half of this year? Do you have those?

Jen: 3:26

Yeah, it, it's really, it's interesting actually cuz what we saw happen in the property market was this really big impact from the triple CFA changes that happen on the 1st of December. So it's been interesting for me. I've, uh, been having conversations with colleagues in the States and in Australia and they're all wondering what on earth has happened in New Zealand and I always start with this conversation about, the triple CFA and you know, things were starting to slow down towards the end of last year anyway, but that came along, made it much harder for people to get their financial ducks in a row. And we saw that really slow the market. And then we started to see these other things come along that really started to have those that impact. So increasing interest rates, conversations about inflation, global economic uncertainty war in the Ukraine. So all of those sorts of things have, have completely changed the game in terms of the market. So even when the government rolled back some of the most onerous changes to the triple cfa, in July this year, you know, they really had little impact in the market because there were so many other elements in play. But what we've seen is us settling at a new level of, uh, market activity. So for the last couple of years, things have been very, very fast paced. I think it's been a lot of property changing hands, 2021, absolute record on so many levels. And now we are really generally sitting about 30% down in terms of the number of properties changing hands. And that has been the case for much of this year. So really settling into that new pattern. Awesome. So I'll get straight into the, innovation and technology chat cause it's, what we're really interested in here at Relab. So how, how do you see REINZ see innovation and technology changing the property? I think there's two parts to that. I mean, I, when I think about innovation, it isn't necessarily tied to technology. So if I start with, I'll start with the innovation question because I think that there's a lot happening in this space that will impact really broadly across the property spectrum in terms of things like innovation in our, response to climate change. So what is that gonna look like in terms of, how our buildings are built, set up used, lived in. Going forward, I think we will see a lot of innovation and necessary innovation in that space. Then things like generational shifts in how we are living. So we did a piece of research, towards the end of last year. I think it was the time is getting aw away me this year, about the major trends that will impact in the property market in the next decade or so. And this idea of sort of generational shift, is really strongly anchored in that report. And it talks to not only how we live our lives and the types of technology we use, but actually how we live and what our, as our family or, uh, our family makeup looks like in terms of our homes. And so I think there'll be some innovation in terms of those sorts of things. Co-housing, you know, multi-family homes. Sort of thing. We're starting to see that overseas. And then one of the really cool things that this, piece of research pulled up was. Uh, things like kind of growing need in the electricity space and there's a lot of property out there with roofs, lots of which face north perfect for catching the sun's rays to generate electricity. So there's starting to be this conversation about the convergence of property and, electricity generation, which that sort of stuff just really spins my wheels, hence why I'm sharing it with you. More in that technology space we have seen through the pandemic a massive investment in technology from real estate firms across the spectrum in New Zealand, and it has really changed how real estate has been done. That investment, obviously through those lockdowns enabled. Online auctions and, you know, digital completion of the contracting process and, you know, all of those things that had to go online. So I think that has been, you know, a massive step forward in this profession. And what we are seeing off the back of that is more and more change in terms of, Process automation, thinking about the use of data to provide better services and better products, both for, uh, real estate professionals, whether those are sales agents or property managers or what have you. But then also products for customers as well to make that process easier. I think too, the, you know, there's a lot of compliance in real estate these days. I mean, I was, I was out of real estate for a few years and I remember coming back in 14 months ago when I got this fabulous job. And I couldn't believe how much new regulation was in place for property managers and, and real estate professionals now. And I think that there's this real opportunity in that technology space to deal with some of that compliance burden.

Stacey: 8:22

Yeah, that's a really good point. I wanna go back to your. Point on, sustainability and the climate change. We've done a few webinars before around sustainability and in particular different ways of building such as, concrete, printed concrete. What are some of the things you're seeing that really interests you, like the particular technologies that are, that you're seeing happening throughout New Zealand? So I mean, I think that the, this, this idea, like I said, the convergence of, uh, electricity generation and, and housing I think is a really interesting one. But one of the things that we are starting to see is, the data starting to bear out some of the growth and the importance of the environmental and social, Impact of buildings, particularly in that commercial space. There was a, a fantastic report that was, delivered by JLL, I think it was yesterday actually. I read it last night. And really interesting to see the data in that start to show, the impact of demand for environmentally friendly or green star rated buildings and businesses in particular getting really serious about their climate impact and thinking about their, the way that they work and their property as part of their overall solution to that. So lots of interesting stuff in that space. But I think too, that in the mega trends, research that we did, what came out of that was that young people, so people in their twenties and early thirties these days, for them, climate change and sustainability are the most important issues of their time. And that is not the case for people of older generations. And I, I look at that and I think, well, you know, these people do not currently have the economic power in this country or many others, but they will. And when they do their demands of, uh, this profession, just like every other, industry will, you know, come to bear. And it's great that we're starting to have these conversations now because they're only gonna get more important. Yeah, I agree. And, how do you see data playing a big role in REINZ in the wider industry?

Jen: 10:39

So for us as an organization, we are currently going through a full sort of business transformation at the moment, anchored, on a change of platform. So we're a membership organization and there is happily, off the shelf, membership organization software used globally. While we say it's off the shelf, it still requires a significant change in an organization in order to put it in, but then to change all of our processes to enable it. But what that is gonna enable us as an organization to do is really be able to focus our human resources on the human aspects of what we do. So there is a lot of process automation within the system. A lot of self-service, a lot of ability for our members to much be able to much eat more easily. Get what it is that they need from us. So like every business out there really thinking about how we, making sure that the people in this business are doing the kinds of things that only people can do, and using technology for the other parts of it. So that's a really key part for us. It's also about using that data to really understand. What and when our members need particular things from us and anticipating that using automation. So we are doing all of that sort of stuff as well. Won't be a surprise to anybody else in business that those things are happening in terms of, you know, think about the way that we collect and use the data that we collect. It's not our data, the data that that we have is data that our members provide us. So we collect, if I just use, residential sales as the example, we collect all of the unconditional sales data every month from all of our members. We take that into our system, we match that with, um, a considerable amount of data that we buy from all sorts of other places, including all of the councils. So we have all of this data that we buy in and then we clean it all up and we match it all up to a property record. And that's the information that we provide back to members that choose to get their data from us. We have done a lot of work on, our api. So the way I, I kind of think of it as like a pipe of the raw ingredients. So we now have, the latest type of API that pipes that data to, quite a number of our members. And the way that we think about that data is that is a foundational element of what. The membership organization for real estate provides its members to enable everybody to rise because the quality of the data and the way in which we deliver it will enable our members to compete on a higher but level playing field. And so that's really where we're at with our, with our data play at the moment. Awesome. Yeah, it's, I love to hear that. And in the property industry in general, how, how would you like to see innovation technology, being used, I guess, on a day to day basis or, how it can really filter down from, your, at the top of the hierarchy? How does that filter down into a house getting sold? Um, I think that's a great question. Because I think we are really in the early stages of seeing what this, new era of data and digital first and, will deliver for real estate across the spectrum. So I'm really excited for that journey in terms of the way that I think about, these sorts of things. I mean, one, I think for me, I would love to see. Technology solutions to better support the compliance burden in this industry. The value of real estate professionals is in their ability to connect and engage with other people. And whether that means building trust and rapport with somebody who is going to list their, biggest asset or their, you know, commercial building with you for sale, you know, they are trusting you with that. We are not seeing. Anything that is looking like it's gonna disintermediate real estate agents because it's not a short transactional trip or a, you know, it's not like Airbnb and Uber is a much, much bigger, more important process than that. So anything that can remove the compliance burden around that so that our. The people in this profession can deal with the people that need their services. I think that would be great. Starting to see little elements of that. I actually think, that there is this opportunity for technology like blockchains to really help with that. If I think about, you know, the burden of AML. And what real estate professionals have to do in that space and the cost to all of New Zealand in terms of that compliance. I think that there, there must be better technology solutions in this space. And for me, one of the ones that I've, thought about a fair bit is the ability for blockchain to, to deliver on this, you know, imagine a world in which I own my own digital credentials that are, on a blockchain so that immutable, and, and they completely belong to me. And then when I deal with you as my real estate professional, or my lawyer, or my bank, or frankly anybody else who wants to verify my identity, I simply allow you access to those credentials online. And away we go. I mean, it just completely changes the game. It gives me back power of my credentials, but it makes it much, much easier for everybody else. I, I mean, I just would love to see those sorts of things happen. I don't think anybody's questioning the need for us to do aml. It's an important part of what we do in an important role that we play for all of New Zealand. But there's gotta be a better way to do some of those things. And there are, I mean, there's compliance elements, right through the property management, process. That, you know, I just think that they're, I'd love to see some innovation, along those lines. Again, I guess coming back to what I said earlier around centering people, I remember. Years ago, hearing multiple, coaches talk about for, agents, you know, you should be focusing on the hundred dollars an hour job and outsourcing the$20 an hour job. And I think, yeah, absolutely. That is still a legit, piece of advice, but how do we get all of our people to focus on that a hundred dollars an hour job and use technology to deliver those, those things, the process. The processing roles, you know, all of that sort of thing I think is really interesting. But then a better, a better management of assets. And this, I think, is a space in which, there's a lot of PropTech, a lot of PropTech, particularly around commercial facilities management. Um, heaps of really interesting things happening in that space to enable the better management of assets from a maintenance perspective, but also from a management of costs perspective, whether that be management of water or electricity or, you know, anything else. Access. There's a lot happening. I think that it's only a matter of time before those elements are. Repurposed into residential settings. And then also I think just I'm, I'm all about open information and the more information that is available to everybody, to absolutely to our members and real estate professionals, whether that be through us or whether that be through things like, you know, councils, councils have enormous amounts of data. But don't, haven't historically had the resources to invest in the technology to open all of that data up. So I think that there's more opportunity for more information so that both real estate professionals and their customers have got, more info at their fingertips. Just one other thing that I would say in that space too. I think that, We, we live in a world where there is so much change in innovation all of the time. And I think there are, there, well I know that there are, a lot of really clever, passionate people thinking about the use of data, the use of technology, and, where all of that is going in order to solve yes, economic problems, but absolutely to solve social and environmental problem. As well. And when I think about the profession that we work in, in our industry, you know, Whether you rent or own your home or business premise, everybody in New Zealand is, has a vested interest in in real estate and in what happens in this space. And I think that we will absolutely see in our profession more and more ways that technology and innovation will help deliver the environmental and social outcomes that, we need as a society just as much as it will enhance, the process of transacting or managing property.

Stacey: 19:43

Yeah. kind of pulling from a few different points you've brought up. I'm just thinking about the. How easy it is to access data compared to, you know, you could, you can access pages and pages and pages of data, but, how is that easily accessible to everyone? I'm just thinking there's so much, that we could do in that space.

Jen: 20:08

Yeah, I, I think you're right. You're just getting a massive dump of a whole load of information unless you are a data scientist and that, and your idea of a fabulous day is a dump of information. It is the insight on the top of the data that is the value, right? So it, it's thinking about, in fact, we were having conversation just the other day about data visualization and how are we, how are we doing that within our organization? We are a tiny, little membership organization. Right. Um, you know, we have a, a handful of people in our technology team. But it's really important for us that when our members come and look at our stuff, that they can easily understand what it means. And for most people, that means a visual of the data, not the actual data itself. And I think that, you know, we, I mean we see this everywhere and it's really growing, but when I, when I think. A whole load of extra information. It, it's got to be with insight in mind that we do that. Otherwise you are just going to end up with real estate professionals spending more and more and more time trying to understand what an earth all this information means.

Stacey: 21:18

Yeah. And it'll be such a huge job to understand every, every facet of real estate's job. Yep. I was also thinking about, The idea of, like as a society, we need to, we need to start being more adjustable to how we live. And that whole idea of, not wishing for a quarter acre, but a quarter, quarter hour travel to work.

Jen: 21:43

How about I talk about the, I'll talk about the 20 minute City concept while you do that. So, yeah, I mean, I think that, that this, it's an urban planning challenge, right? That this idea of sprawl up versus out, Greenfield versus brownfield is a really big deal. It's a big conversation for New Zealand. It's been a big conversation internationally for a really long time. There's been some really interesting examples of cities that have tried to implement this. So, Paris, got a new mayor. Five years ago, I think it was that, who just abs who got in off the back of this idea of the 20 minute city. And started talking about and getting, city planners in, in Paris to, to think about how are they laying down the foundation of planning regulation to support a more livable city where people are a 15 minute walk or cycle away from the key things that they need. So, you know, groceries, schools, parks, and. A healthcare facility, I think was the other one. So, so this is really starting to be something that New Zealand cities are thinking about as well. Certainly the government is interested in, increasing the density in our city's heads, a number of the, planning rules that they have, brought in in the last little while. So, and we are starting to see that. But it's not without its pain points. I think. So I'm, uh, based in Auckland. I think about the pain points around the conversation with Auckland transport around, not just public transport, but just putting in cycle ways and how painful that is for, for small businesses and for local communities. You know, this kind of like change in how we live is not going to be universally loved and adored. Not everyone is going to be happy with it, but I think that over time you think about how many more apartments and terraced homes there are in Auckland, now, and not only does that create more, city benefits in terms of having more people living in a closer proximity, but it has in a world where property prices have just gone up and up and up, has created choices and options for people to get onto the property ladder. And I think we will see that continue across New Zealand, really with more smaller backyards and more choice for people.

Stacey: 24:00

Yeah. I, I really like that concept. It's an interesting point cause I, with my friends starting to buy houses at the moment, there's, there's still a bit of resistance to that. Oh, will I stay in Auckland? Because it is moving towards that. So I'm really interested to see how it changes over the next. Five years, I guess, because I, I think it has been quite a drastic change for some people recently. Cause all, all of a sudden they've popped up. But yet it will be interesting to see in the next few years as the idea kind of settles in and, and how we transition and, and move into that a bit more. Be interesting to see.

Jen: 24:36

Yeah. And I think, you know, there are elements of supply and demand in this space too. I mean, developers are not really in the business of building stuff that they're allowed to build on the odd chance that people are gonna, are going to buy it. They build density in cities, in city fringe suburbs and in central cities because they know that they will be able to sell it. I mean, if they were building that kind of density, I don't know, in a, in a small rural town, you know, you imagine maybe there would be elements of of it that would work, but you just. You don't see that level of density in places where people are choosing more of a country lifestyle for obvious reasons. Right. So there is an element of demand and supply to, to this change as well. And what we can see is that people will choose to live like that. And you go and live in London. Yeah. You just, well, unless very, very wealthy, you know, you are not going to be going and, and living in central London in a house with a backyard.

Stacey: 25:38

So true. Yeah. I guess my last question for you is, I know night our CEO was talking to you last week, and he was talking about, how you've really championed a need for, adjusting to adversity and, and really, championing your team to adjust to differences and, and abrupt changes. I'm wondering if you can talk to that a little bit.

Jen: 26:06

Yeah, sure. I mean, we as a membership organization, we, we are here to service the needs. Real estate professionals across New Zealand and when things change for them, things necessarily need to change for us. And so we have really focused on that in the last year or so. And I think that the investment in technologies, a really is a really obvious one from my perspective, that, you know, we have worked really hard to understand the direction that real estate professionals are taking their technology and then re-engineer. Our systems and our approach so that we are delivering to their needs because they are, they're our customers. And you know, I think, and we will continue to do that. Think about what we are doing in the education space at the moment and how we are thinking about what members will need from us going forward. Having the same kinds of conversations. Where is this space going? What's the best way? To train and educate, real estate professionals. Now, what do they need? How do we anchor that into our organization? What change does that require of us? So really being very open to thinking about doing things differently and being different in order to serve. And I think that that. That is how most organizations today think about their customers and, and think about change. Cuz you know, we no longer have years to make these kinds of decisions. Things, as you will know in the PropTech world, change day to day.

Stacey: 27:34

Yeah. Exactly. I think that's a great point to end on. And that's a wrap. Thanks to my. I guess today Jen Baird. This was such an awesome chat about innovation and technology improving in the property industry. Thanks so much for tuning in. Mā te wā