Episode Details

If many employees continue to work from home, then perhaps demand for property in close proximity to capital city CBD’s will fall. And conversely, perhaps demand for property in regional centres that are well serviced by pubic transport (trains) will increase. This encourages us to consider whether the work-from-home movement will change the way we invest in property.

Covid forced us to work from home

Most employees have been required to work from home over the past few months due to the COVID shutdown. Of course, for most businesses, mobilising their entire workforce at short notice created a number of teething issues. But most businesses have adjusted to the ‘new normal’. They have resolved most operational issues and staff, in the main, are enjoying the flexibility that working from home provides.

Of course, this is not true for all businesses and employees. Working from home suits some roles, employees and industries better than others.

Some of the benefits of working from home include improved productivity due to fewer distractions. The elimination of travel time means employees can spend more time with family and/or complete more work. Therefore, it seems to provide benefits for both the employer and the employee.

In fact, Twitter is the first global businesses to confirm it will now allow employees to work from home permanently. Senior public service leaders in Canberra and many states and territories around Australia are also contemplating more permanent work-from-home policies too.

But it has its downsides

Of course, it’s not all positive. There are some downsides to working from home. These include not having a suitable workspace and limited face-to-face contact with clients and co-workers.

Research conducted by Dutch social psychologist, Geert Hofstede highlighted that human connection and relationships in the workplace are big contributors to job satisfaction. We have all come across people that dislike their job/employer but stay because they enjoy the people they work with. The reverse is also true i.e. people have left a role because they disliked the people, they worked with even though they make have loved the job.

Impact on demand resulting from working from home

Of course, if more employees work from home permanently – either on a full-time or part-time basis, demand for office space will fall, which will likely have negative consequences for commercial real estate. But what about the residential property market?

If people choose to work from home, then they no longer have to commute to their workplace. This gives them more options in terms of where to buy a home. For example, a greater share of the population may be more attracted to regional cities and towns, particularly as housing is more affordable in these locations. If that is the case, demand for housing in capital cities might fall, creating downward pressure on prices.

There are many important factors that determine where we want to live

It is important to remind ourselves that our choice of where to live is influenced by many factors, and proximity to one’s workplace is only one of those factors.

Perhaps the most compelling consideration for families with children is education. Living in a regional town might otherwise be attractive but if that means kids have a 1.5 hour each-way commute to school, it’s probably not going to work.

Proximity to family is also a persuasive factor when determining your home’s location. This is particularly the case if you need to look after your unwell parent