The importance of market research for sales success
As a result of the well documented housing crisis there’s plenty of new housing providers entering the affordable home ownership market with ambitious plans to deliver, often for the first time, homes for sale through a variety of tenures including Shared Ownership and Help to Buy. This is fantastic news for first time buyers and for those households looking for good quality, affordable new homes.
However, it is important that Housing Associations, Local Authorities and Developers consider potential new development opportunities carefully. Failure to carry out detailed market research to assess the suitability of future sites can trigger a magnitude of potential risks if the development fails in the future. The market research process helps to analyse things like market size, competition and market needs.
Understanding the risks
Apart from the obvious risks of failing to achieve sales targets, the impact is potentially huge if housing providers fail to carry out a thorough analysis of their market, and consequences may include:
- Increasing costs of stock holding and reducing values
- Scheme appraisals not achieving the necessary returns
- Marketing budget over spend and loss of sales income if sales drag on or abort
- Damage to reputation
Customer needs
So, what are the basics to consider when carrying out market research: Market research can be considered as a method of getting an idea of the needs of the customers. If you don’t fully understand their needs, then you are at risk of marketing homes for sale that your customers don’t need or want. So, when you are considering a potential development opportunity for sale, it is vital that several factors are investigated which will help mitigate potential sales risks.
Covering the basics
When considering a new development opportunity, you must consider the following as standard:
- Go and look at where the site is. A quick look at google maps will often suffice to make a quick judgement on a potential site opportunity but does not replace the value of going to see where the site is – there can be a whole host of factors that may impact negatively on sales that you will not always be able to identify from a map.
- If you don’t have knowledge of an area it is always good to check websites such as www.rightmove.co.uk, the local authority’s website for details of any planning applications www.ons.gov.uk or www.streetcheck.co.uk for demographic data for the neighbourhood.
- A review of land registry data to gain an understanding of what prices comparable homes have sold for in the local area (not just the price that they were marketed for sale at).
- It is important to review what the local competition is doing. Find out who is competing locally, how long have they been actively selling, what range and size of property types are they offering? Are the local housebuilders targeting a family market, first time buyers, singletons, elderly households or a mix? Local developers will have carried out their own research to identify gaps in the local housing market so learn from them too.
- Does their show home create a wow factor? Is it ultra-contemporary or more traditional? Is the developer appealing to younger client group or a more traditional market? Are there Black and Minority ethnic design requirements to consider such as two reception rooms for the Asian market? Also, what purchaser incentives are they offering (if any)? If they are offering a full range of incentives this may suggest that sales are slow.
- Trends in the market – how is the local housing market performing? What are the local estate agent’s opinions of the market, which property types are in highest demand? Your local Help to Buy agent may also be able to help. Find them at https://www.helptobuy.gov.uk/equity-loan/find-helptobuy-agent/
The process of market research is integral to be able to compete with other players in the housing market and ultimately maximise sales opportunities, deliver developments for sale within sales and marketing budgets and meet the needs of your customers.
These points only provide a snap shot of things to consider and a combination of detailed analysis, local knowledge and experience and not forgetting trusting your gut (feeling) are important to help inform decision making around new housing development opportunities.
LWC can prepare detailed market intelligence and due diligence reports to support your development programme. LWC can provide a vital support role to your organisation by bringing order and clarity to a complicated process of compiling market research reports; not just by gathering market intelligence data but by carefully considering and making clear judgements and recommendations in respect of the right property mix, tenure, pricing and demand for your site.
To find out more about Lisa Westerman Consultancy Ltd (LWC) and ways in which we can help
support your development programme, visit
Lisa Westerman
t 07393375068
e Lisa.westerman@lwcl.co.uk
@LWC_Housing
Professional sales and marketing services for the housing Industry