It’s an understatement to say that COVID has changed how we live. Even here in Australia, the restrictions we’ve endured have made life over the last 12+ months look different. This includes within our own homes, with our living environment taking on a new, much larger role as we work from home and spend more time there.
With life now largely returning to “normal”, we’re seeing the long-term effects of this change. The practical solutions put in place to deal with the pandemic – like widespread working from home – are continuing. People have also rethought their priorities and are either considering, or have made, a major move.
As a result, we’ve seen some interesting new trends emerge within the property market. The current strength of the market, and the stark contrast it provides to earlier, more pessimistic predictions, has been widely documented. But less attention has been given to the details of the buying decisions currently being made.
Here we look at how COVID has made people reassess their living situation and the impact that’s having on the property market.
Choosing lifestyle over location
One of the biggest housing trends brought about by COVID has been the increased interest in lifestyle locations. With more people now enjoying working from home, proximity to major business hubs has become less important. This, combined with the general desire for more space, has many buyers looking outside of the big cities.
In fact, a recent report by CoreLogic found that regional property prices have increased by 7.9% over the last 12 months. By contrast, property prices in the capitals have increased by only 1.7% over the same period. This is largely being driven by those looking to escape the city and has been exacerbated by limited supply.
Tourist locations within commuting distance of a capital (e.g. NSW Central Coast, Shoalhaven, and Southern Highlands) have been particularly popular. These locations often provide many of the amenities you would find in the city, but with a quieter, more laidback atmosphere. Properties in these locations also tend to be more affordable, meaning buyers can get a lot more for their money.
Upgrading to something more substantial
Another major trend we’ve seen is homeowners looking to upgrade to a bigger or better property. After spending more time at home over the last year, some feel their current property no longer meets their needs. As such, they want to cash in on the current strength of the market and trade up.
Maybe they’re looking for a dedicated home office space to allow them to comfortably work from home ongoing. Maybe they want a higher quality of finish or more generous layout. Or maybe they simply want to move to a better street.
Whatever the motivation for their move, these buyers are propping up the higher end of the market. While prices for these properties remain strong, more buyers are seeing the extra cost as an investment in their lifestyle. They are also seeing the current record low interest rates as an opportunity to increase their financial reach.
Rethinking their current space
Those that are unable to move – or simply don’t want to – are considering how to optimise their current living space. This has led to a renovation boom, with many homeowners planning to update or extend their property.
While kitchen and bathroom renovations continue to be popular, builders are seeing a range of new features being requested. Home office spaces are in particular demand, thanks to the increased prevalence of working from home. Home gyms and cinemas, as well as flex spaces, are also highly sought after.
To help keep the costs down, many homeowners are attempting to do at least part of the renovation work themselves. Others are choosing to invest money set aside for (now cancelled) international travel in their renovations. As a result, in addition to improving the property’s liveability, many of these renovations are being planned with capital growth in mind.
Entering the market for the first time
In response to the uncertainty created by COVID, many people have been actively seeking stability. For some, this has come in the form of a career change or starting a new business. For others, it’s meant deciding to take the plunge and buying their first home.
In addition to the psychological impetus, these buyers are being spurred on by a range of government support schemes. These initiatives have made securing a property more accessible to a wider range of people. That being said, the increased competition in this market segment is seeing many buyers priced out of their preferred area.
The current record low interest rates are also helping more new entrants get into the market. While median prices are continuing to increase in most areas, this is partially offset by the increased borrowing power. It’s also helping more first-timers see property as a worthwhile investment, particularly compared to the low yields offered by traditional savings accounts.
Need help planning your next move?
If COVID has made you reassess your priorities, and you would like to discuss your options, give Local Agency Co. a call. Our team are across all of the latest market developments and are always happy to offer advice.