One of the hottest topics of the past 12 months has been the droves of families relocating from major cities to the countryside—taking advantage of a more relaxed lifestyle and lower rates of coronavirus infection while maintaining their careers over Zoom, Slack and other digital collaboration platforms. Reinforcing this is an upswing in office vacancy rates, with data from the Property Council of Australia (PCA) indicating 9.2 percent of office space was without a paying tenant in mid-2020. Sentiment in the office sector was a more damning statistic, with the capital growth expectations index of office space falling from 18.2 in December 2019 to -65.6 by June 2020.
Recent data from UK property platform Zoopla indicates the theory of a mass exodus from London has been overstated so far. Although demand for smaller homes slightly declined over the pandemic, increases in the proportion of demand was found for larger homes—but these were larger homes within the city limits. Of course, London was impacted by COVID-19 to a far greater extent than any Australian city, as were comparable powerhouses such as New York, Paris, etc.
The proof in the pudding for Australia is the quarterly count of residential property sales split between capital cities and the rest of state. In the case of Sydney and NSW, there was a notable decline in sales volumes in mid-2020. In part, this would have been influenced by COVID-19 restrictions. But it was also impacted by seasonal factors (winter slumps in sales activity). Q3 2020 recorded an upswing in the number of sales in regional NSW, but by no means is this a record. In fact, there were almost as many in Q4 2019 just prior to the COVID-19 outbreak.
It’s likely that home sales in regional NSW (and elsewhere in Australia) will increase over 2021, but this will come down to a number of factors. First, an upswing in Sydney house prices will likely prompt some residents to seek out affordable living as they did during the last boom. Second, delayed relocations will stimulate activity in many city and regional markets in 2021. Third, the first version of the HomeBuilder grant ruled out most of Sydney’s housing stock due to eligible new homes being restricted to a value of no more than $750,000. Finally, some digitally-equipped households will seek out a lifestyle further from the city—just nowhere near as many as we’ve been told. Those who do leave will be replaced by swelling urban populations.