Hybrid work refers to the arrangement of working from both home and office or alternating between these two. The specifics might differ based on the company’s policy or the nature of your work.
Working from home has become a common part of life today. Technology has enabled people to work away from the office and post-pandemic work culture has shifted towards the hybrid or remote working model, changing what many workers think of as a good place to live and work. The price of real estate is determined by where people live and work, so let’s see how this trend has affected the property market.
An Increase In Demand For Homes In Remote Suburbs And Regional Areas
People working in the central business districts of cities have traditionally lived in expensive locations in or near the CBD, to be close to where they work. During the pandemic, however, this began to change. Amidst low interest rates and soaring property values, and as many people shifted to working from home, residents of expensive inner-city markets began moving to larger homes in regional areas or more remote suburbs, where they could buy a bigger property for less.
A Pandemic-Led Population Boom In Suburbs
In a span of three years, from December 2019 to December 2022, the population increased in several suburbs; sea change and tree change regions gained thousands of new residents, KPMG analysis shows. The Ormeau-Oxenford region on the Sunshine Coast of Queensland, for example, became one of the top five areas for population growth, with a net gain of 24,500 people. And Western Australia’s greenfield Swan region on the outskirts of Perth attracted 15,600 more people than it lost.
The fastest-growing regions between 2019 and 2022 were Rouse Hill-McGraths Hill of NSW, Blacktown-North of NSW, and Ormeau-Oxenford of Queensland, with annual growth rates of 12.1%, 7.9% and 5.3%, respectively.
|State||SA3||2022 Dec ERP||Change 2019-2022||Annual Growth Rate 2019-2022|
|NSW||Blacktown – North||147,300||30,100||7.9%|
|VIC||Casey – South||237,100||29,400||4.5%|
|QLD||Ormeau – Oxenford||170,500||24,500||5.3%|
|NSW||Bringelly – Green Valley||147,400||21,700||5.4%|
|VIC||Melton – Bacchus Marsh||204,100||20,500||3.6%|
|VIC||Tullamarine – Broadmeadows||212,300||18,800||3.1%|
|NSW||Rouse Hill – McGraths Hill||60,500||17,500||12.1%|
|QLD||Springfield – Redbank||113,300||14,300||4.6%|
Source: KPMG, ABS
Another factor in this heavy migration to regions was the Regional Home Buyer Guarantee scheme, which allows buyers to secure a home loan in a regional area with a deposit as small as 5%.
Change In Average Prices In The Suburbs And Regions
After COVID-19 hit in March 2020, the combined regional housing price surged by 41.6%, but has dropped 5.7% since peaking in June. Some regional markets in New South Wales and Queensland had a drastic rise in house prices, by 70% or more, CoreLogic data from the start of COVID to November 2022 show.
The 20 house markets that have had the greatest uplift in home values since the start of COVID went from an average median of about $306,000 in March 2020 to $527,000 in January 2023. Regarding unit markets, the top 20 unit markets went from an average median of around $392,000 in March 2020 to $618,500 in January 2023.
Due to the rising interest rates, the median values plummeted in more than 2400 houses and unit markets nationwide in 2022, CoreLogic data of this January revealed. The downward trend spread to 51.7% of analysed suburbs. However, home prices dropped about 10 to 20% depending on the property type and suburb.
Surge Of First-Home Buyers
First-home buyers were among those taking advantage of remote working arrangements and low-interest rates to buy or build homes away from the inner city. Buyers wishing to purchase new homes preferred low-priced housing in newly developed regions.
AMP Capital chief economist Dr Shane Oliver talked about the surge of first-home buyers during the pandemic: “It’s reflective of the ultra-low interest rates and government assistance at that time. We went through a period where assistance measures for homebuyers were far above what we would normally expect to see.
“The bulk of those who moved will be permanent. We’ll have a longer-term trend of more decentralised living, more working from home, as the cities get busier. The pandemic dramatically accelerated that.”
Houses With Working And Living Spaces
Flexibility in work has benefited people with children and older relatives, since they are no longer tied to a physical area for their career and livelihood. Many have moved out to more affordable regional centres and suburbs with bigger properties for a seemingly improved quality of life at a better cost.
This, in turn, increased the demand for properties with dedicated workspaces – or at least buildings with co-working setups.
Rising Demand For Office Space
The rapid increase in the number of employees working from home eliminated the need for a large office at many organisations. API Magazine has reported that, as of January 2023, the national vacancy rate for offices was about 13.3%, which is the highest rate since the mid-1990s and a rise of 0.4 percentage points since July. The demand in the two biggest markets, Sydney and Melbourne, was 11.3% and 13.8%, respectively. The figures showed that the net demand was negative, below the positive demand historically, increasing the vacancy rate by one percentage point approx. – in both CBDs.
The hybrid working model has been viewed as a cost-saving measure that helps businesses stay competitive amidst economic uncertainties. Instead of getting locked into long-term contracts, businesses opted for short-term leases or shared workspaces that allow them to scale up or down depending on their requirements. Global Workplace Analytics shows that a hybrid working model could save some businesses an average of over $14,300 per employee.
Companies downsized their downtown office spaces due to hybrid work. The new way of operating business and hybrid work culture is here to stay, post-pandemic.
We Can Help!
Whether you want to buy the right home that accommodates your hybrid work situation or upgrade your home for a bigger one with dedicated office space, Home Loan Experts is here to help. Our experienced mortgage brokers will help you assess your situation and help you get a loan that suits your requirements. Contact us at 1300 889 743 or fill in our free online assessment form today!