It’s hard to see any lasting effect that Covid 19 will have on the post pandemic property world beyond the short term. It has been postulated that some sectors of the property market might need value readjustments, due to changed demand patterns. It is also touted that more people will work from home and therefore escape the eternal blight of road congestion. But all that may not actually prove true. As many are discovering first hand, remote working by a large number of employees, is not particularly efficient or more conducive to cohesion, team work or problem-solving. So perhaps it will not be an appreciable lasting pattern into the future. After all flexibility per se, is not actually a KPI of corporate performance. Rather it is a subset of creating a more productive workplace.
In terms of the effects of Covid on long-term retail behaviour. There is a convenience to shopping under one large roof in a weather-proof environment that offers obvious advantages to shoppers and amenity to almost every demographic, from the old who need elevators and disabled parking, to the young who can buy jeans and go to the movies all in one space. That is simply not able to be offered by strip retail. Also these large centres are often located in parts of the city that offer maximum convenience locationally and are therefore impossible to replicate in other areas.
Industrial will continue to expand with the onset of online shopping. Its triumphant march in terms of total floor area built, will continue until levelling out subject to population growth and total retail spend by a given city population. This pattern will reduce the value of purchases in-store but will eventually just get added to the total retail spend, with the market likely to simply build less retail, and the population of cities such as Sydney and Melbourne simply continuing to increase.
Residential will also not be too adversely affected. In fact, there is a genuine possibility that in a zero-interest-rate environment, residential will prove a real winner, with investors flooding out of cash into property and also equities. Will detached homes increase their share of the total market share? Probably not given that the average price of a new home in a middle ring suburb in Sydney is already at an unaffordable $1.2 Million. So apartments and smaller dwellings in the six big cities are still likely to be the most selected mode of living, post pandemic.
So how much will really change in the post pandemic world for property in 2021 and into 2022. With a vaccine virtually nothing. Without, probably a little bit. The most important factor for property price growth remains population growth, so as permanent migration, foreign students and tourism begin to return, the COVID days will become a forlorn memory in the minds of many property owners who have endured the difficult days of the Frightening Flu of 2020.