Living with COVID will change the housing landscape
Broadbeach Waters, Qld., Aug. 11, 2021 /Medianet/ --
Living with COVID will change the housing landscape
Global trends reflected Down Under
The COVID-19 pandemic has helped to accelerate certain trends which were already underway in the Australian economy, including more flexible working arrangement and particularly working from home, and the desire to have a housing market foothold in desirable lifestyle locations.
developments from countries with further advanced vaccination rollouts suggest
that the Delta variant of the virus is leading to persistently high case
The substantial increase in cases is leading to a third booster dose recommended by healthcare experts. A third boost has already commenced in Israel and rolls out in the UK next month.
The virus will persist, as will related disruptions - and this is likely to be the case in Australia too, where the vaccine rollout is far less advanced, despite the recent acceleration.
The federal and state governments have agreed to a four-stage process to open up and live with COVID-19, and the final step arrives when more than 80 per cent of the adult population is fully vaccinated. In substance, it means that Australia, like many other countries, will live with COVID.
This is likely to have key implications for Australia’s economy, demographic trends, and the domestic housing market landscape.
Pete Wargent, co-founder of national property buyer’s agency network BuyersBuyers, said “we expect to see a continuation of the current trends for more flexible work and working from home well into 2022, by which time many of these trends will be so entrenched that they may not reverse in full.”
“We are getting increased levels of enquiry from buyers seeking to buy in peri-urban locations, away from the major city centres, but still within a reasonable travelling distance” Mr Wargent said.
“These trends were already in evidence a few years ago, but the pandemic has accelerated them.”
Local economic impacts
Sydney is now entering an extension of its lockdown restrictions, for at least a further 4-week lockdown.
This has already had a marked impact on consumer confidence, although it hasn’t yet fed through to property market surveys on sentiment towards residential property.
The extension of the New South Wales lockdown also locks in another negative quarter of GDP growth for the Australian economy, reversing much of the improvement seen earlier in 2021, including for the tight labour market,
Tight employment markets for skilled workers, who demand flexible working arrangements, are likely to see hybrid model of working in the office only part of the time, persisting beyond the end of the pandemic.
Housing landscape shifts – lower demand for rental apartments
Doron Peleg, CEO of RiskWise Property Research said that ”there is presently very little investor appetite for high-rise units, where rental markets have been particularly soft over the past year, especially in inner-city Melbourne”
“This is reflected in a material reduction of dwelling approvals for units of four storeys or above.”
“While sentiment has improved from last year’s nadir in Sydney and south-east Queensland, there has been no such recovery in Melbourne, and overall approval levels are running far below their previous market peaks of several years ago” Mr Peleg said.
Figure 1 – High-rise unit approvals
Doron Peleg said that “net overseas migration expected to remain very low all the way at least until Q2 2022. Therefore, we believe that investors should be wary of markets with a high volume of supply in the pipeline, as recently covered in our oversupply risk report.”
Mr Wargent of BuyersBuyers said that “inner-city Melbourne is the most obvious example, where there are many vacant units. But there are some other pockets of oversupply risk which are best to be avoided.”
Internal migration and demand for lifestyle areas
The Australian population spread has spread itself further out over the past year, a trend accelerated by the increased ability – and in certain cases necessity - to work from home.
Mr Peleg of Riskwise said that “our recent sea change versus report found that coastal markets have fared best of all since the pandemic began, though numerous inland treechange markets have also fared very well indeed.”
“The top performing markets over the past year were Byron Bay and Sunshine Beach, but it’s worth noting that markets such as Orange and Mittagong in New South Wales have been exceptionally tight, and Buderim on the Sunshine Coast is another top-performing inland market.”
Mr Wargent of BuyersBuyers said that south-east Queensland has been a particularly popular choice with our clients, from the Sunshine Coast to the Gold Coast, with interstate migration now running at the highest levels since the post-Olympics period and the early parts of the mining boom some 15 years ago”.
Figure 2 – Interstate migration
“Many of our clients want to buy in regional areas at the moment, generally close to the capital cities, such as Cessnock in New South Wales or Southport in Queensland” Mr Wargent said.
The 2022 reopening
Mr Wargent added that “when international borders reopen in 2022, we expect office occupancy to pick up again, and the capital cities will reassert themselves as the destinations of choice for new migrants”.
“However, the trend towards more flexible work arrangements is unlikely to be reversed in full, and therefore there will be something of a hybrid model going forward, with more office workers likely to work only 2 or 3 days per week in the office, rather than the traditional 5, for example” Mr Wargent said.
For all media enquiries, contact BuyersBuyers Media Manager Alison Sollory, Alison.Sollory@buyersbuyers.com.au