Since the dawn of human civilisation, we have gathered in groups. Whether it was early settlers or modern day civilisation, it has all been an attempt to perfect cohabitation.
While this was borne out of security and general well-being, this has somehow evolved into convenience and comfort. Higher population areas (particularly in developed countries) brings with it advanced infrastructure, broader suite of services, enhanced quality of life and diversity of options.
Now what happens when you throw a wrench in the system? One noteworthy wrench of late has been the COVID-19 pandemic. The highly contagious nature of this virus has challenged the effectiveness of high-density urban living, with major cities being a focal point.
What I am curious in investigating is whether society’s perception of major city living has fundamentally changed due to COVID. Now it’s worthwhile noting that COVID’s impact will likely be felt for years to come. However, the data collected from the past 12 months may provide some indication of the direction we are heading.
Escaping the city hustle for country bliss!
In previous posts where I’ve summarised the market performance of the Australian housing market, I’ve noticed an interesting trend. The growth in Australia’s market during 2020 is driven far more by regional areas than major cities. In fact, regional area house prices increased by 7 percent, compared to 2 percent in capital cities.
What’s even more significant is that this represents the first time since 2004 since regional areas outperformed capital cities. This is not all that surprising, as approximately 3 out of 4 working Australians expect work from home arrangements to exist post-COVID.
The underlying cause of the population migration
The question I have is why is this movement happening now? Regional housing areas were growing pre-pandemic, albeit at a slower level. Approximately 1 in 5 workers had a work from home arrangement before 2020. Further, the growing telecommuting times also evidenced that a greater portion of the population opted to live further from workplaces.
My thoughts are that COVID has put to test a decades-long question – is remote working sustainable? While a portion of the workforce were already remote, it has never been applied at such a large scale.
Notwithstanding the few awkward Zoom encounters, the remote working experiment has largely paid off. The majority of Australian workers are optimistic of remote work and feel as productive as when they were in the office. Furthermore, over 80 percent of Australians surveyed would like to continue with remote working even after the pandemic.
So while more of the population transitions to permanent remote work, there is less importance in living within commuting distance. As such, I would wager a guess that the regional growth we’ve seen last year is expected to continue.
Challenges to the remote living movement
While the current trend is in favour of remote living, there are a few factors that could stop the movement in its tracks.
For starters, pain is often temporary. While the pandemic remains fresh in people’s minds, that may quickly change once the population is fully vaccinated and restrictions are lifted. As a result, 2020 may simply become a blind spot in most people’s memories.
Further, companies may reverse course. A number of large multinationals have set unprecedented measures to allow the majority of their workforce to operate remotely, even after the pandemic. However, a mobile workforce can be a costly workforce, due to tax and payroll considerations. Therefore, these remote work policies may swiftly be reversed if these costs begin hurting companies’ bottom lines.
Finally, it is difficult to replicate convenience and creature comforts in rural areas. Ride sharing, expedited shipping and food/grocery deliveries aren’t widely available in remote locations. This may be a tough pill to swallow for those that have lived in cities for most of their life.
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The pandemic has given a boost to the growing trend of regional living. Furthermore, the data suggests that the changes in working arrangements will only support this trend going forward.
As this position is still evolving, I will update this post in a year’s time to confirm whether remote living is here to stay or if it ran out of steam.
The content outlined above was written, edited and published by the Lost Realtor. The author has over 20 years or real estate sales and investing experience in the Australian property market. He has held senior positions in Australian building companies, including being the General Manager of the residential sales division of Collier Homes. His qualifications include a Bachelor of Commerce degree and a Graduate Diploma in Building and Construction Law.