You’d struggle to find two types of investment more opposite to one another than cryptocurrencies and property.
Property may be among the oldest investments a person can make while cryptocurrencies didn’t even exist ten years ago.
Property is solid, tangible, something real; cryptos only exist in cyberspace.
Property has been slow to incorporate new technology whereas trading cryptos is only possible thanks to new tech.
The sheer differences between these two investment types cause them to attract different crowds. Money and technology segregate young and old investors, broadly speaking.
The tech literacy you need to invest in cryptos and the small amounts you can pour into them make these digital currencies more suitable for young, strapped-for-cash investors.
Bricks and mortar on the other hand remains popular among older generations, not in the least because you need (a lot of) money to invest in it.
That last bit – that you need a lot of money to invest in property – is no longer necessarily true.
The rise of “proptech” (property technology) has allowed new tech businesses to jam their foot in the door of this age-old sector.
One of the main consequences is that it’s giving young investors a way into a market that was previously a no go.
What is proptech?
Proptech is a catch-all for companies that marry property with technology.
Proptech companies aim to make a lot of services in the property industry easier for us. They simplify the process of applying for a mortgage or let us control the thermostat from our phone when we’re not even at home.
Just visit the app store on your smartphone to get an idea about how proptech is changing our lives.
Need to rent a room or a flat? There’s the Rightmove or Zoopla app to browse through a wide selection of available property.
Want to book an affordable bedroom for a weekend getaway? Then you go on Airbnb and book an affordable room in someone’s house that undercuts local hotels.
Can’t settle bills with your housemates without bashing each other’s head in? The Splittable app tracks costs with housemates and splits bills for you.
A wave of companies uses tech to “refine, improve or reinvent the services we rely on in the property industry,” says Manideepa Paul in a blogpost on Medium.
“With the advent of PropTech, new businesses with an enhanced emphasis on customer experience and customer service are offering more convenient, efficient alternatives to out-of-date processes we’ve learned to put up with.”
That’s because we’ve already seen this happening in a whole range of other industries.
Big established companies dominate an age-old sector. Then a new, tech-savvy business appears out of nowhere to turn the market upside down.
This phenomenon has been given the name “uberisation”, after what tech company Uber did to the global taxi industry.
All of these tech companies that succeed in completely transforming industries have a few things in common.
They offer their services through a digital platform; there’s only a minimal distance between the customer and service provider; and they make use of a rating system for the quality of the service.
This is, in essence, the business plan of the tech companies that are leaving their mark.
It’s how Uber changed taxis, it’s how Airbnb changed the hotel business, and it’s how new tech companies are changing the property market.
How proptech disrupts the property market
Property has been relatively slow to embrace technology compared to other industries.
The tech revolution depends for a very important part on young people using apps on their phones. Generation Y (people now aged about 23-38) and Generation Z (people aged 13-23) are important audiences for new tech companies.
So it’s not really a surprise proptech took a bit longer to gain momentum. The rate of homeowners is much lower for these generations compared to previous ones.
Average house prices have grown seven times faster than the average income of young adults over the past 20 years, says a study by the Institute for Fiscal Studies.
Homeownership among people aged 25-34 on an annual wage of £22,000-£30,600 dropped to 27% in 2016 from 65% two decades ago.
If people can only afford to buy their first home in their 30s or 40s, you can forget about 20 or 30-something landlords.
“Put plainly, with no skin in the game there is low motivation for these generations [Y and Z] to effect change,” Fred Bristol concludes in Property Week.
But that’s changing now.
Technology is making it possible for young adults to invest in property without needing the cash to buy an entire house themselves. A bunch of people can now share ownership of property through crowdfunding and investment platforms.
These platforms democratise property investing. They grant a lot of people access to a market that would otherwise be closed off to them.
A sum of £2.5m has been invested in UK property investment platform Brickowner in the first half of 2018. Generation Y and Z investors brought in about 44% of that amount.
So it appears young adults finally get to have some skin in the rather expensive property game. All thanks to these new and innovative ways to invest in the property market.
Proptech is levelling the playing field. Young adults and many others who have been excluded from these markets for decades can finally invest in property again.