Australia’s most expensive housing markets near central business districts (CBDs) are likely to be most affected by the disruption caused by the remote working trend.

REA Group economist Paul Ryan said it is very likely that demand for expensive markets, especially those near CBDs, will decline as more companies adopt flexible work arrangements.

“Expensive markets are almost always near CBDs and therefore have the highest proportion of workers able to work from home,” said Mr Ryan.

“Those who live in expensive markets have the greatest potential to save money by lowering their housing costs by relocating.”

Which areas will be most affected?

Mr. Ryan referred to data from Dingel & Neiman, which showed sectors in the United States with the highest proportion of jobs that can be done from home.

The sectors with the highest proportion of work-at-home jobs include education and training, professional, scientific and technical services, finance, information media and telecommunications, wholesale and real estate.

Mr Ryan said these are broadly similar in Australia and most jobs in these sectors are in major cities.

“This is not surprising, as industries focused on information and heavy use of technology have benefited from the density of complementary skills in cities,” he said.

“The regions with the highest share of workers before the pandemic – nearly half – are close to CBDs in Sydney and Melbourne.”

Sydney’s eastern suburbs had the highest percentage of workers able to 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 significant proportion of residents who can take flexible work arrangements at 45%.

Other locations with the highest share of working from home are regions in Brisbane, Perth and Adelaide.

These top regions have median prices that are relatively higher than the national average. For example, Eastern Suburbs and North Sydney and Hornsby have median prices of over $1 million.

“The combination of greater ability to relocate and maintain current employment, and greater benefits from this, means expensive inner-city real estate markets are likely to be most vulnerable to post-pandemic work arrangements,” Ryan said.

Top regions with the largest share of work-from-home jobs

City

Region

Share of work from home jobs

Median house price

Sydney

eastern suburbs

47.82%

$1.65 million

North Sydney and Hornsby

47.53%

$1.42m

City and Inner South

45.5%

$1.03 million

Ryde

44.65%

$1.23 million

Northern Beaches

42.51%

$1.67m

Sutherland

40.48%

$1.1 million

Inner West

40.23%

$1.16 million

Baulkham Hills and Hawkesbury

39.23%

$1.29m

parramatta

38.48%

$770,000

Melbourne

inner

45.0%

$735,000

Inner East

44.38%

$1.2 million

Inside South

43.61%

$1.07 million

Outside 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 homeworking were able to report strong price increases last year.

“Much of this has been driven by an increase in demand from those who now have greater geographic mobility,” he said,

“It is likely that more people will be able to take similar steps as remote work arrangements are finalized in more workplaces and employees are assigned to employers who are remotely friendly if they want to leave the city.”

Data from the Australian Bureau of Statistics (ABS) showed a significant population decline in the two largest cities, with Melbourne losing more than 50,000 residents and leaving 6,600 Sydney.

Still, Mr. Ryan said cities are unlikely to lose their appeal. He believes that this current trend will not completely shift demand out of the cities, but will only “rebalance” the real estate market, dividing demand into regional areas.

Photo by Chris Montgomery on Unsplash

Top Suburbs: Lockridge, Werribee, Alexandra Hills, Emerald, Tuart Hill

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