- Changes to the domestic housing market landscape will continue, even beyond the pandemic
- Tight labour market has allowed for workers to demand flexible working arrangements
- Demand for apartments are expected to decline
It is no surprise that the pandemic has highlighted the desire for a larger home.
More flexible working arrangements, especially the surge in those working from home, has fuelled demand for housing foothold in desirable lifestyle locations.
The co-founder of property buyers agency network BuyersBuyers, Pete Wargent, said the ongoing pandemic – especially with the Delta variant which is still leading to high case numbers even in countries with a more advanced vaccine rollout – will continue to have key implications for the domestic housing market landscape.
“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,” said Mr Wargent.
“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.”
Pete Wargent, BuyersBuyers
“These trends were already in evidence a few years ago, but the pandemic has accelerated them.”
Although negative GDP growth for the September quarter is likely, given the extended lockdown in Sydney, a tight labour market will likely remain.
The tight labour market is especially prevalent for highly skilled workers who demand flexible working arrangements and view the hybrid model of working in the office part-time in good stead, and therefore expecting this arrangement to live beyond the pandemic.
“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 two or three days per week in the office, rather than the traditional five, for example,” added Mr Wargent.
Houses versus apartments
Subsequently, this trend is expected to increase the demand for houses while lowering demand for other dwellings, especially apartments.
This is reflected in the number of high rise approvals which has plummeted since 2017, due to a lack of demand from investors and owner-occupiers.
‘High Rise’ Approvals
“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,” said Doron Peleg, CEO of RiskWise Property Research.
“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.”
Doron Peleg, RiskWise
Mr Peleg made mention of the Byron Bay and Sunshine Beach markets, along with the inland Orange and Mittagong markets in New South Wales, which have been both performing well.
“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.”