Big data is transforming industries across the world, and has become a vital accessory across all industries. Data has completely changed how results are calculated, including campaigns, employee performances, it’s used by social media sites to define consumer audiences, and is used on a daily basis in decision-making processes.
The property market is notoriously slow to adopt general trends from other industries, but data is now making inroads into the industry on a macro level. Data has always been used by large companies to inform their decision-making processes on the property market, but now it is being made available to smaller landlords, letting agents, property managers, developers and investors.
Pricing and Yield
The most important statistics are around pricing and yield. For example, a property investor may want to know the average yield of a 3-bedroom semi-detached house in Leeds, and this data is available to be analysed. Rental yield is also critically important for income-seeking landlords, and this is something that statistics can help decipher by looking at both historical and recent trends.
According to Michael Dent at PropertyData; “for landlords/investors, data is a particularly powerful tool for identifying new potential investment areas at the high-level, and then diving in to analyse those local markets of interest in much more detail, and comparing areas side-by-side. They can even find unusual property opportunities such as repossessed or unmodernised properties.” Benchmarking the rent of currently-owned properties, for example at an annual rent review, is another way to use data. For property developers, £/sqft data is very important, as when it’s combined with GIA (gross internal area) it’s a crucial statistic to calculate the GDV (gross development value) of a potential property development
National vs Local
There is so much potential for data in the property industry, and data can range from national to local statistics, and they should be used in tandem for the best results. Property investors are generally keen to look at ‘national data’ to look at the property market at a macro level – nationwide trends and indicators or market health, etc. Then ‘local data’ allows analysis of a particular area in greater detail, and the micro-level analysis can go to such detail such as:
|Types of housing stock in an area|
|Looking at flood risk|
|Fibre internet availability|
|Restaurant hygiene levels|
|Even political party voting history!|
Transparency is key
These days across all industries, getting data isn’t the problem, there is so much out there for anything you can think of, the skill is in interpreting it. To get the most out of property data, you need get the most transparent data samples, you need to know where the data is coming from, how it is processed, when it was collected and so on, to be best placed to make a decision.
Michael Dent emphasised that the methodology on how statistics are calculated is as important as what the data shows; “landlords and property owners should make sure that they are not being shown averages calculated from sample sizes that are too small. The best kind of statistics use the interquartile mean which we believe is the strongest statistical metric.”
Just like big data has revolutionised the way other industries do business, the scope for data in property is enormous, and landlords, developers and property managers could all benefit immensely by using data. From obvious things like housing market trends and commuting options, to the less obvious details like school availability, to minute details like what kind of food delivery options are available in the area, data can provide this insight. Data can help inform your decisions, providing you with statistics to back up your ideas, or even dictate your decisions, if they show that one area has a higher trending yield than another.