Working remotely an accelerating phenomenon

In 2016 the Australian Bureau of Statistics reported almost a third (3.5 million) of all employed Australians regularly worked from home. Since the onset of COVID-19, this number has skyrocketed. In March a Gartner survey showed 88 per cent of Australian organisations have adopted working from home as part of their coronavirus response many to cut costs during the pandemic by focusing on “effective use of technology (cited by 70 per cent of respondents) and freezing new hiring”.

“While many organisations were using remote working to improve productivity and the attractiveness of workplaces to entice the best talent, reduce office costs and reduce international and intrastate travel prior to the onset of COVID-19, it has now become an accelerated phenomenon with offices across large cities trying to minimise face-to-face meetings that required commuting. 

“Interestingly, since COVID-19 and the increase in remote working there has actually been an improvement in productivity.” The Gartner survey states 49 per cent of respondents said they had been more productive during the time they would normally spend commuting to work, 36 per cent were less stressed and 32 per cent were better able to concentrate as they were not distracted by colleagues.

Office vacancy rates are a clear sign of how the pandemic has affected employment. According to the latest Property Council of Australia's Office Market Report, Sydney’s has almost doubled from 3.9 per cent to 5.6 per cent for the six months to the end of July while in the Melbourne CBD it rose from 3.2 per cent to 5.9 per cent.

 “While there was definitely uncertainty during the first wave of the pandemic, the second wave shows us quite clearly these new work practices are here to say most likely until end of 2020 and well into 2021,” he said.

 “Therefore, the demand for regional areas offering great lifestyle choices is likely to further increase among those with stable incomes.”

 There are also a number of additional incentives that put home buyers and especially first home buyers in an enviable position. These include federal government programs such as the First Home Buyers Deposit Scheme whereby a deposit of just a 5 per cent deposit can be used to enter the property market and the avoidance of Lenders Mortgage Insurance (LMI), as well as stamp duty exemptions.

 “Lower interest rates also materially improve housing affordability in terms of serviceability ratio, i.e. the monthly repayments for any price point are simply lower,” Mr Peleg said.

 “What this all means is now is the time to buy if you are a first home buyer or an owner-occupier as this current slowdown in the property market is only temporary, with houses in popular areas likely to experience solid capital growth in the medium to long term.

“Once the COVID-19 issue is resolved, most likely in 2021, the traditional connection between low interest rates and increase in dwelling prices is likely to take place.”

He stressed, however, that investors buying rental apartments unsuitable for families were taking an enormous gamble, with both equity and cash flow risk expected to materially increase. Serviceability is also a major factor for investors who rely on a stable rental income to cover the costs associated with property and particularly the mortgage.

Co-founder of BuyersBuyers.com.au Pete Wargent said navigating the current market conditions was challenging but understanding the nuances of the local market and negotiating accordingly on price and terms was the key.

“If you negotiate well, you can secure a very good property and manage the risk of lower prices in the short term by simply paying less,” he said.

Rich Harvey, Buyers Agent and CEO of propertybuyer.com.au said the pre-spring and spring market would provide a range of opportunities for buyers to consider getting a better foothold in the market as listing volumes started to rise. 

“With the onset of COVID-19, areas such as the Sutherland Shire, Inner West and Inner South West, that were showing good promise have paused their strong growth trajectory and now represent good value for buyers,” he said. 

“The traditionally strong markets of Eastern suburbs, Northern Beaches and North Shore are also giving buyers the chance to get in for lower prices than last year.”

Visit www.riskwiseproperty.com.au