Are you considering buying property based on recent headlines that working from home is a game changer for property?
I know I read in the media, almost every day, that this new working from home phenomenon will apparently lead to a boom in regional and seaside towns.
I remember reading similar headlines over a decade ago, post GFC, when it was all about a sea-change or tree-change shift.
While there is no doubt some chose this route, there is no evidence these minor trends led to any significant benefit for property prices in these regional locations.
The reason is – majority rules and always will.
So, I am calling it out now as I am certain it will be the same result this time around.
Here are my thoughts.
Australians working from home
Data collected from the Australian Bureau of Statistics has suggested that there has been a modest increase in the amount of people regularly working from home over the past 5 years.
There is no doubt, as we continue to see major technological advances and changes that this trend will continue.
I know that I have never been so accustomed to meeting our clients and team members via Video Conferencing, it has certainly made it easier to work remotely.
It has also decreased the reliance on coming to the office for meetings and the like.
I would also argue, it has opened the minds of workers and employees to different kinds of possibilities that may not have been front of mind pre COVID.
As a result, there is no doubt this trend will increase at a much faster rate over the next few years and COVID is bringing a lot of that momentum forward.
But, by just how much and by how far can it increase?
How much of the workforce can work from home?
There have been two separate studies recently coming out of Chicago and Norway that have addressed this very question recently and published by Forbes.
These studies suggested that around 36% - 37% of jobs could realistically be done from home.
Further research closer to home, from Roy Morgan falls in line with the ABS study and has suggested that 32% of working Australians have been working from home during Lockdown over the last few months.
Their research (below) also highlighted the Top 3 and Bottom 3 industries that are working from home.
So, if one third of Australians are currently working from home and the studies suggest 37% of our workforce can realistically work from home, potential impacts are being overestimated.
That would mean that there may only be room in the current, short to medium term environment for a further 6% - 7% of our workforce that may choose to work from home.
Obviously, over the medium to longer term, with further advances and changes in the way we work this figure will expand, but not in the existing environment.
Where will the 37% choose to live
While the figure suggests 37% can realistically work from home, this does not mean they will choose to relocate elsewhere.
Employment is just one factor that makes up the decision-making process, albeit one of the most important.
There are also additional factors to consider and not everyone will seek a change, with many still drawn to our capital cities because of;
- Education – Universities and Schools for their children
- Convenience – Having everything on their doorstep
- Lifestyle and Entertainment Precincts – High walkability
- Infrastructure and Public Transport
- Health Care – Doctors and Specialists
Many of these demands can only be met by our bigger capital cities, and the growth in jobs will continue to be led by capital city locations.
Why Fight the Big Trends?
It amazes me that investors continue to be side-tracked by minority trends.
They seek to find the latest “hotspot” or are focussed on something new and exciting (although always unproven) trend.
Previously it was the Seachange and now it is Working from Home.
They should be focussed on the known and proven historical trends, supported by facts, research and data and not the latest news headline or thought-provoking article from a novice property “expert”.
In this case, people working from home or remotely, will continue to be a minority over the short to medium term.
It can take potentially decades for technological and modern advances to be implemented and actioned to make a shift within society.
So, why focus on what 37% of people may or may not do, when you already know what 63% of people will do?
Follow the big trends and lower your risk to build longer term, sustainable wealth.
Brett Warren is a director of Metropole Properties in Brisbane and uses his 18 plus years property investment experience and economics education to advise clients how to build their portfolios.
He is a regular commentator for Michael Yardney's Property Update.
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.