Future of client management Gareth Herbert - Sales Director

“Nearly every social and technical and business infrastructure we have can’t survive”

Facts about the market

2014 2015 FTB £29.4bn -flat Homemover £44.6bn £45.3bn +1.5% Remortgage £38.1bn £41.1bn +7.8% Buy-to-Let £17.2bn £23.8bn +38%

Short term market interest rate expectations What does this mean for interest rates? Short term market interest rate expectations (3 Month Sterling LIBOR Rates, %)

Annual house price growth has slowed Preferred forms of communication Annual house price growth has slowed Annual house price growth has slowed Annual percentage change in UK house prices

Large regional divergence persists Regional house prices relative to 2007 peak

Pace of remortgaging hard to gauge

BTL increasingly important to mortgage market

Ongoing tenure trends will provide support for BTL

Lack of supply already a constraint on market activity RICS - average stocks of properties on books

…and stock for available for sale has declined What is going on? Available stock on rightmove.co.uk

Long-term forces are driving falling housing turnover Owned Outright Owner-Occupier, Mortgaged Private Rental Social Housing Source: English Housing Survey, 2014 Investors trade properties roughly half as often as owner- occupiers Mortgage-free empty-nesters have no pressing need to trade down, and few properties suit their needs - expect them to transact like investors First-time buyers have been helped with their first purchase Their second purchase must satisfy stringent affordability tests and reach elevated prices without support Expect the gap between first and second purchase to widen

The market appears constrained by supply… demand drives prices but not volumes Housing turnover is already incredibly low today - 32M houses / 1.20 transactions per year = 1 transaction per property per 27 years!? Implies large pools of rarely traded property Implies many latent risks All else equal, current construction volumes and changing tenure trends will cause our markets to shrink further …10% fewer mortgages by 2025 …15% fewer mortgage purchase transactions by 2025 In the 1990s we were short of buyers, so we focused on first-time buyers In the 2010s we are short of sellers, so we should focus on new-build

Remortgage Customer PCW’S Education MMR/MCD Regulation Trust Opportunities Remortgage Prisoners Interest only Consumer Behaviour Protection Campaigns

Opportunities Interest only First-time buyer New Build Self Build Custom Build

Most important social media channels Consumer behaviour Social media opens up whole new ways of reaching those clients that have embraced that technology – but this is unlikely to be the whole of your client base Most important social media channels 44% 31% Social Media 30% 18%

Influence – The art of persuasion Commonality Social Proof Scarcity Commitment Reciprocal Commonality Social Proof Influence – The art of persuasion Liking Scarcity Authority