September 2020

This is the 26th in a series of articles summarising monthly news and happenings in Sydney real estate, and more broadly.

Property values, and working from home

This month there seems to have been an increasing interest in the ramifications of the COVID-19 work from home paradigm shift, and how it relates to property values. Domain noted it in a look at why first home buyers might be increasingly drawn to the fringes of a city. Apart from the fact of COVID-19 normalising working from home to some extent and so at least temporarily removing the need to be tied to the city so much, other reasons included having the opportunity to feel a more distinctive sense of community that being in a new and developing area can have, and the relative affordability compared to more established areas closer to the city.

The article includes discussion with Stockland’s general manager of community sales Stephanie Mackenzie, and writes:

“The pandemic has been a catalyst for people to take stock of their current home, lifestyle and environment and reflect on what they need now and in the future, says Mackenzie.”

Tim Lawless also noted the phenomenon in this month’s monthly Core Logic Housing Update. With a slowing -0.4 % decline in property values month to month nationally, -0.5% in Sydney, and -1.2% in Melbourne, other cities were basically flat or moving into slight positive value growth. Combined regional values were flat (0.0%) and combined cities were -0.5%

Lawless says, “… the normalisation of remote working through the pandemic could make proximity to the major cities less of a factor in home purchasing decisions.”

Source: Core Logic

The Real Estate Conversation also notes the trend in an op-ed piece. John McGrath, of McGrath Real Estate, writes “In NSW, we’re seeing big enquiry from Sydneysiders on the Central Coast and in the Southern Highlands, Newcastle, Orange and the Illawarra.

“Our McGrath Central Coast Principal, Jaimie Woodcock said good quality homes were selling for 10 per cent more than pre-virus, with the most popular being coastal acreages and renovated homes with beach views. ”

The interesting thing is that Melbourne and Sydney, being ground zero for most outbreaks in Australia, also have the 2 biggest business districts, and combining those 2 factors, the 2 biggest work-from-home transformations. Up until the pandemic regular articles such as this bemoaned how bad commuting in Sydney and Melbourne could be, and now we’ve been handed the answer to some extent. Given the choice, why would we – en masse – go back to that?

And also, could the pandemic be the start of rebalancing some of the massive housing value disparity between city and country? It is obviously too early to judge, but over the coming months and years perhaps the trend will become clearer.

Lastly, on the flipside of this theme, the ABC discusses what do do with the great empty wasteland of the CBD. One suggestion is to provide incentives for landlords to let creative organisations take over the empty spaces. Are we talking about a new renaissance? Despite the uncertainty of what this could mean for property prices, the prospect of turning the CBD into a massive creative zone has to be one of the most mind blowing ideas of the 21st Century. Not only could this help to reinvigorate one of the sectors most badly hit by the pandemic, but also from a cultural perspective, could potentially be be something to be very proud of. Paris, for example, has well known state owned writer residences available for artists to use over an extended period, and this is something Sydney especially has increasingly been lacking in.

Central Coast properties are consistently selling higher than before the pandemic.