What's in Store for Real Estate in 2021?
Last year was one of the most challenging, unpredictable and life-changing in recent memory. Because of COVID-19, it saw significant disruption and change in every aspect of our lives. The way we socialise, exercise and entertain ourselves all shifted.
Property markets were not immune from the effect of last year's events. Isolation, work from home and homeschooling changed the way we use our homes and also made us think about where we want to live.
These changes led to three major trends which will continue to grow and playout throughout 2021:
- The home is now (also) an office - The way we use our homes has changed, as it is now also a workplace.
- The regional revolution accelerates - Where we can live has changed, and we are witnessing more people opting to move outside our capital cities.
- The construction industry to cater for new lifestyles - Because what we want and need in a home has evolved, construction and renovations will need to adapt and cater for a new way of living in our homes.
The home is now (also) an office
Before COVID-19, working from home was, for most, a one or two day a week occurrence and done at an individual employee level. The recent events saw this change, and it is now, generally, a company-wide policy, much more widespread and commonplace to work full-time from home.
Evidence of this shift can be found in our survey of 1,430 people (LJ Hooker, November 2020). It showed that, before COVID-19, 79% of people worked at their place of work and only 21% from home. This evolved over the course of 2020 with 38% of respondents saying that they now work remotely. Furthermore, 36% said that they would still be working from home in 2021, while 64% will be back in the office.
This change already has and will have ramifications for property markets over the coming years. It has made many people think about where they live, how they live, and the functionality of their homes to cater for a new way of living. This often includes seeking an extra room to use as an office space.
If setting up your office every day on the dining table might have been an option to address a temporary situation, it can’t be a long-term solution. When working from home becomes a permanent arrangement, then thinking about setting up a real home office becomes imperative.
This is why some homeowners in this situation might look into renovating or even expanding their homes to create a dedicated work area. Others might prefer to sell and buy bigger, often in a regional area that will offer a similar or better lifestyle at a cheaper cost.
The regional revolution accelerates
More and more people are looking at where they want to live in a post-COVID-19 world.
Not having to commute to the office every day offers many opportunities. Not only it allows to enjoy and a better work-life balance, but it also gives the possibility to look beyond city limits to find a dream home. Indeed, when working from home and searching for a new place, a fast and reliable Internet connection becomes more important than the postcode.
With more and more companies happy to offer the option of working from home, or even encouraging it, the hurdles that would have prevented a move to a regional area are fading away. This is particularly true for people working in industries designed to embrace remote working, such as IT or Finance. For them, the option of living in their dream location has become a real opportunity that many will want to seize.
Moreover, these remote workers will often be able to enjoy a similar or better lifestyle at a cheaper cost. For a home of a similar size and standard, the rent or mortgage they will pay should be nowhere near what they used to pay in capital cities, where they were forced to live when commuting five times a week to the office. In other words, by making a regional move, they will release the financial pressure and allow themselves to purchase a home without sacrificing their quality of life and even improving it.
For these reasons, towns like Noosa on the Sunshine Coast, Bangalow near Byron Bay or Wollongong and Thirroul in the Illawarra region have experienced a boom since the start of the Covid-19 era. One of the LJ Hooker offices that operate in NSW’s Central Coast region has reported that approximately 90% of enquiries now come from Sydneysiders. In comparison, it only used to be 50% before Covid-19.
Local governments in regional areas have also been quick to see the emerging trend of more people looking to the regions. They are actively providing support and even financial incentives in some cases for businesses to set up within their local towns and regions.
The construction industry to cater for new lifestyles
The construction industry will need to consider the layouts of apartments and houses to cater for work from home and schooling arrangements. Indeed, with new work habits and lifestyle also come new ways of thinking about the home.
After having experienced one or more lockdowns, Australians now want more space in their home and might favour houses over apartments. This often means looking for a place with an extra room to use as an office space. Likewise, dedicated work areas or built-in desks have been in high demand, and this trend should only increase in 2021. Granny flats should also be booming. They appear to be the perfect home office, as they make it easier to keep some boundary between work and personal life.
The good news is that the recent tax cuts that came with the new Federal Budget will provide households with more money in their back pocket. This extra cash will contribute to helping them achieve their renovation or expansion projects. It will also benefit the ones looking at taking a loan to upgrade by increasing their borrowing capacity.
Thanks to government incentives and stimulus measures encouraging them into the market, 2021 should also see first home buyers activity peak. The record-low interest rates, as well as the extension of the First Home Loan Deposit Scheme (which allows eligible applicants to build or purchase a newly constructed home with a deposit of as little as 5%) to offer an additional 10,000 guarantees in 2020-21, will put them in a favourable position to leap.
DISCLAIMER - The information provided is for guidance and informational purposes only and does not replace independent business, legal and financial advice which we strongly recommend. Whilst the information is considered true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information provided. LJ Hooker will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.