Australia's most expensive housing markets close to central business districts (CBDs) are likely to be most affected by the disruption brought about by the remote work trend.
REA Group economist Paul Ryan said there is a high likelihood that demand for high-priced markets, particularly those within close proximity to CBDs, will moderate as more companies adopt a flexible work set-up.
"Expensive markets are almost always close to CBDs and therefore have the highest share of workers able to work from home," Mr Ryan said.
"Those living in expensive markets have the greatest potential to save money by reducing their housing costs by moving."
Which areas will be most affected?
Mr Ryan referenced data from Dingel & Neiman, which showed sectors in the United States with the highest share of jobs that can be done from home.
The industries with the highest share of work-from-home jobs include education and training, professional, scientific, and technical services, finance, information media and telecommunications, wholesale trade, and real estate.
Mr Ryan said these are broadly similar in Australia and most of the jobs in these sectors are located in major cities.
"This is not surprising given industries focused on information and heavy use of technology have benefited from the density of complementary skills within cities," he said.
"The regions with the highest share of those employed before the pandemic – close to half – are close to CBDs in Sydney and Melbourne."
Sydney's Eastern Suburbs region had the highest share of workers that can work from home at 48%, followed by North Sydney and Hornsby (47.53%) and City and Inner South (45.5%).
Melbourne's Inner-ring region also had a substantial proportion of residents that can take on flexible work arrangements at 45%.
Other locations with the highest share of work-from-home jobs include regions in Brisbane, Perth, and Adelaide.
These top regions have median prices that are relatively higher than the national average. For instance, Eastern Suburbs and North Sydney and Hornsby have median prices above $1m.
"The combination of higher ability to move and maintain current employment, and greater benefits from doing so, means expensive property markets in inner cities are likely to be the most vulnerable to post-pandemic working arrangements," Mr Ryan said.
Top regions with the biggest share of work-from-home jobs |
|||
|
City |
Region |
Share of work-from-home jobs |
Median House Price |
|
Sydney |
Eastern Suburbs |
47.82% |
$1.65m |
|
North Sydney and Hornsby |
47.53% |
$1.42m |
|
|
City and Inner South |
45.5% |
$1.03m |
|
|
Ryde |
44.65% |
$1.23m |
|
|
Northern Beaches |
42.51% |
$1.67m |
|
|
Sutherland |
40.48% |
$1.1m |
|
|
Inner West |
40.23% |
$1.16m |
|
|
Baulkham Hills and Hawkesbury |
39.23% |
$1.29m |
|
|
Parramatta |
38.48% |
$770,000 |
|
|
Melbourne |
Inner |
45.0% |
$735,000 |
|
Inner East |
44.38% |
$1.2m |
|
|
Inner South |
43.61% |
$1.07m |
|
|
Outer East |
38.28% |
$770,000 |
|
|
Brisbane |
West |
43.77% |
$710,000 |
|
Inner City |
42.44% |
$700,000 |
|
|
North |
38.15% |
$585,000 |
|
|
South |
37.38% |
$655,000 |
|
|
Perth |
Inner |
43.3% |
$840,000 |
|
ACT |
ACT |
41.56% |
$650,000 |
|
Adelaide |
Central and Hills |
39.83% |
$650,000 |
Data Source: PropTrack, REA Group
Mr Ryan said regional markets are already reaping the benefits of the trend. Regions with a smaller share of work-from-home jobs were able to report solid price gains over the past year.
"Much of this has been driven by an increase in demand from those who now have greater geographical mobility,” he said,
"More people are likely to be able to make similar moves as remote working arrangements are finalised in more workplaces, and workers sort into remote-friendly employers if they aspire to leave cities.”
Data from the Australian Bureau of Statistics (ABS) showed a substantial population decline in the two biggest cities, with Melbourne losing more than 50,000 residents and 6,600 leaving Sydney.
Still, Mr Ryan said cities are unlikely to lose their appeal. He believes that this current trend will not completely shift demand away from the cities but will only "rebalance" the property market, distributing demand to regional areas.
Photo by Chris Montgomery on Unsplash
