While we would like to think the socially distant dystopia we’ve been living in for the past few months will come to a sudden end and we’ll return to our old lives, the reality is that we may never return to where we came from….and that’s not necessarily a bad thing.
Many of the changes we initially found irritating and challenging have now become a way of life for us. We’ve become so accustomed to our ‘new normal’ that the thought of going back to our old germ spreading ways is not very appealing and a mix of old and new will prevail.
So, what does this mean for the property market?
Sea and Tree Changers
Working from home has not been everyone’s favourite experience. However, the increase in interest we’ve seen for properties in coastal and regional areas – above and beyond the usual demand for retirement and holiday properties – indicates many are opting to ditch the urban commute in favour of a sea or tree change. These regions have historically been very cyclical and often owned by holidays makers who ‘sell off’ in tough economic times, but with the urban sprawl, congested cities, rising cost of living and for some reduced quality of life as a result, plus flexible working arrangement already driving more owner occupiers in these regions we expect them to hold up well.
Quality of Suburb
More than ever, location is critical. COVID-19 has highlighted the importance of living in a quality suburb. Lockdown has amplified our need and appreciation of living near essential services, parkland, schools and having ample land content. Further, many of the advantages of inner urban living – like proximity to cafes, restaurants and entertainment – have been significantly reduced due to the shutdown of these types of services. We struggle to see the same appetite for inner city living in the short term, exacerbated by lower levels of immigration (a reduction of 240,000 new residents in the next two years according to the federal government) who tend to rent in these areas before buying.
Our attitude towards public transport has changed dramatically and it will be some time before we feel comfortable with getting on a crowded bus, train or tram. However, transport infrastructure hubs, such as train lines and stations, still remain of interest, particularly to businesses and state governments who invest heavily in these areas and see them as employment and lifestyle hubs.
Access to Arterials
While the aversion to public transport continues, there will be a greater focus on arterials. Take a city like Sydney, for example, where it’s difficult to get around. Proximity to an arterial, and the reduced commute that comes with it, is a massive advantage and means those areas will always be in demand in the owner occupier space.
On the back of restrictions halting our overseas travel aspirations, domestic travel is set to take off. Trips to Western Australia and Queensland will replace European summer holidays and it will be a while before people feel comfortable boarding a plane for a long-haul flight. We’ve started to see that already with our clients enquiring whether they should shift their strategy to include coastal and inland properties, not only because of the travel restrictions but more for the lifestyle that comes with those types of properties. And it’s rare to find someone that isn’t considering working less or differently moving forward. We have often reiterated what our clients’ advisors say: It’s a bad move to mix emotion with investing, but if executed correctly, property is one way it can work for you with holiday homes often generating a good income in the right areas.
Value of an Essential Services Tenant
Without doubt, the value of an essential services tenant, such as a healthcare provider or supermarket, has skyrocketed. With so much tenancy risk in many other sectors at the moment, this is one trend that will continue for a long while. Decreases in commercial occupancy rates will see rents come down so your bargaining power as an essential services tenant is going to increase exponentially.
Some great opportunities have surfaced as a result of our COVID-19 life. If you’re keen to take advantage of some of these trends, make sure you get some good advice and take a bit of time to ensure you are making a quality investment.