Property investing has changed
Property investing has changed, writes Mike Mortlock. Photo – Canva.
  • Three fundamental changes have resulted from the upheavals of 2020
  • Residents are chasing shelter by desired location, not access to employment
  • Household design is fundamental to happiness – even for tenants
  • Investing for cashflow is increasingly important

I love an opportunity to occasionally take a moment and consider the state of the world.

It’s a rare indulgence really – who honestly has the time?

And I get how ironic it is that we’re all so busy being busy that we barely pause to notice how much things have really changed.

The pace of change has accelerated in the past year or so. I realise many columns have already been written about the way the world has shifted – no doubt volumes of opinion devoted to 2020 and beyond will bore school students to insanity come 2090 or so.

The thing that’s really struck me is how well we’ve all adapted, including folk who were perhaps in danger of becoming ‘set in their ways’.

On the whole, Aussies have done exceptionally well dealing with the challenges. The economy is going strong, employment is on the rise, our national health is enviable and there is a sense of positivity in the air.

And change has come to the property industry too. I’ve been considering how the sector has adapted and what the long-term ramifications will be.

Here are three fundamental upheavals in the property sector that were a response to last year’s upheavals and what they might mean for investors, owner, buyers, sellers and tenants in the future.

1. Borders are imaginary to investors

I enjoy discussing property with a range of very clever folk. From buyers’ agents and investment advisors, to financiers, accountants and clients – everyone has an opinion.

And most people seemed pleasantly surprised by the way Aussies continued to work, play and live from a home base during shutdowns.

This means we can now truly choose where we live without being corralled into a certain set of suburbs by the location of our workplace.

To be honest, workers were heading in the direction of remote productive anyway. The concept of the gypsy professional with a backpack full of belongings jetting off to a new locale and working remotely from a shared hot desk was a thing prior to coronavirus.

But the pandemic brought focus and pace to the practice.

The result is that many of us who dreamed of the day we could pack up the family and spend six months in a quaint coastal town suddenly realised this was entirely possible.

The result has been a boomtime for regional centres. City slickers fleeing the high-density big smoke and taking in the socially distant laidback lifestyle of the coast, hinterlands and rural centres.

Will this decentralisation be sustained? Well, that really has yet to be tested.

I believe many will move back to the capitals as we progress into a post-pandemic existence. That said, there will be plenty of others continuing to distance work, and a large percentage of those who have moved to the regions have no intention of returning.

The big winners, in the long run, will probably our smaller capital cities such as Brisbane, Adelaide and Perth.

2. Household design is fundamental to happiness

I recently listened to a webinar put together by a Brisbane-based real estate agency that had a high-profile architect as their feature guest.

Two things struck me:

  1. The agents were absolutely giddy with excitement at how hot the market had become in the prestige sector.
  2. This esteemed architect said we are seeing a distinct shift toward the ‘space premium’ in new homes.

I’ve noticed it too. We will no longer put up with cramming two parents, two kids and a dog onto a 350 square metre block just because it’s within coo-ee of an inner-city café hub.

There is value in making space at home. Zones for work and relaxation. Places to get away from each other and rooms where we come together as a family.

Household decisions makers will either find the extra funds needed to secure additional space in blue-chip inner-city suburbs or will more readily shift further afield than they may have pre-2020.

This change is now well entrenched, and I think smart investors and developers will keep it at the forefront of their strategies for some time yet.

3. Cashflow double crowned as king

When things took a turn for the worse in early 2020, the impermanence of steady employment became a reality for many. People who had happily headed into their offices in January with plans for long service leave and an overseas trip in July were suddenly worried about how to feed and clothe their kids.

Of course, this dire scenario didn’t play out for most. What it did show though, is having secure income streams that include a buffer are essential.

As a business that prepares depreciation schedules for investors, we’ve seen a sizable uptick in clients looking to improve their cash flow position this year.

Australian’s have become savvier about how many dollars are coming through the door while finding a way to increase income wherever possible. Second jobs/side hustles, consolidating debt to lower interest rates, offloading unwanted items for a few extra bucks and looking for government assistance wherever possible.

I don’t expect this household hunger for cash flow to disappear anytime soon. We’ll see ongoing interest in boosting household income via investment. Yes – there is plenty of capital growth underway at present, but investors know the good times won’t last forever.

Cash flow is key to survival and a range of strategies and tools will be employed to help ensure its optimised. The types of investment people buy will be critical. In addition, seeking way to minimise tax and maximise rental return will be hugely important.

After spending a few moments turning on the mood of the nation, I think we are in a state of permanent change – and it’s for the better. It doesn’t pay to become too complacent. Innovate, grow and adapt. We’ve been given a kick up the butt by 2020. Perhaps we should harness the momentum and forge forward with purpose.

~~

Before making any decisions, please do your own independent research, taking into account your own situation. This article does not purport to provide financial or investment advice. See our Terms of Use.

You May Also Like

RNY Property Trust delists after major vote

Sydney real estate firm voted off the ASX after 2 years suspension from trading…

Rental bubble should encourage investors, says M Property

M/Property believes that more investors should take advantage of current market conditions..

Sunshine Coast sales and rentals severely undersupplied

A beachside dream house might be out of reach for many with undersupply a major issue…

Insights on the investment market: JLL research

Research from JLL shows five major themes for investors to look out for in the Australia real estate investment market for 2021