As we emerge from the first wave (and hopefully the only wave) of Covid-19, as the lockdown restrictions are eased and life is starting to return to some normality, it’s beginning to feel like the sun is breaking through after a lengthy period of particularly bleak weather. The toilet paper and tissues are back on the shelves, as is hand soap and pasta sauce, and we take time to reflect and try to make sense of the last few months. Whilst the pandemic is far from history at this stage, and it has undoubtedly caused unimaginable trauma, it is somewhat of a relief that the worst of the doomsayers predictions have not so far materialised. It would be premature (and irresponsible) to think that we can now put this nightmare completely behind us, but it does now feel that we can again start thinking of a brighter future with a little more confidence.
It’s Not All Doom & Gloom
According to the CoreLogic Home Value Index statistics released on Monday, property values across Australia have fallen in May, for the first time since June last year, as the economic impacts of the coronavirus pandemic take a toll on sales. HOWEVER, the median values of Sydney properties fell by ONLY 0.4% showing the market has remained resilient to a material correction, which is in stark contrast to some of the bleaker (and unwarranted) forecasts, of drops in value by as much as 20-30%
What’s The Forecast?
These are interesting times indeed, as we transition back to some semblance of normality. But what is this “New Normal” and how does it affect real estate, I hear you ask. Well, it’s difficult to know with any certainty how the aftermath will unfold, but we can be assured of a different real estate landscape. As the workforce comes to terms with what the future may or may not promise, one thing is for certain, and that is that many people who have been working from home in the lockdown are unlikely to be returning to the “Dolly Parton” 9 to 5 routine. Much of the workforce who are not “hands-on” have successfully demonstrated the ability to work remotely from home, not only effectively but more efficiently. Many employers are embracing the work-from-home concept, with the potential benefits to employee and employer being considerable – no commute, less work space required, more flexible working arrangements/shifts, better work/life balance, etc. Naturally one must assume that this shift will have an affect on where people will want to live and how they will want to live. It offers definite decentralisation possibilities, with the tree and sea change options becoming less of a dream and a more realistic proposition. Doubtless it will affect what certain home owners are seeking, with that workstation set up in the guest bedroom no longer cutting it, and now to be supplemented by an extra bedroom or fully fledged home office. There is likely to be a greater focus on home running costs, in terms of insulation/thermal efficiency, solar panels, double glazing, etc. A reliable Internet connection will be essential. For those whose employment requires a more hands-on approach, there could be a greater attraction to setting up home closer to their place of work, again with the commute and reliance on public transport being put under scrutiny. In either case, the altering needs of the community will also prompt a need for change to local facilities, community amenities, transport (public and private), shopping, child care, health care, etc. The longer term effects of Covid-19 on both the residential and commercial real estate sectors are likely to be far reaching.