Aspiration or survival: COVID’s new property reality

The implications of COVID-19, and its exacerbation of the gap between rich and poor, are moving beyond the realm of immediate health and financial needs and shaping the future of our homes and communities.

Major surveys and studies published this week have served to highlight how property buyers are reacting to the health crisis and the sterner challenges facing many moderate to lower-income Australian households.

Two separate studies, one a global survey of 160 developers in 22 countries (including Australia) by international property giants Knight Frank, and another by the Australian Housing and Urban Research Institute (AHURI), highlighted unfolding design and urban planning responses to COVID, and the aspirations of a wide range of Australian households.

Knight Frank’s survey found almost six in 10 global developers have delayed projects in response to the spread of the virus, as it broke down supply chains and prompted a wholesale rethink of how and where people want to live. 

Of those with delayed projects, more than four in 10 are now making changes to designs that were once considered complete.

Knight Frank’s head of residential research Australia, Michelle Ciesielski, said it was still too early to confirm the lasting impact of the pandemic on the development landscape, but it had clearly accelerated emerging trends and prompted new ideas for current and future developments.

“There is little evidence pointing to the need to design for future lockdowns or specified meterage for social distancing but there is a desire to consider potential COVID-19 inspired changes,” Ms Ciesielski said.

The wealth divide

The concerns of the rich and, well, less rich, are markedly different. 

The AHURI survey asked participants to choose their ideal housing in terms of location, tenure, dwelling type and number of bedrooms. 

The results showed there was a preference for owning a house with three or more bedrooms within the suburbs of capital cities, with a notable number also showing a preference for regional living.

But not all households believe they can attain this ideal with rising inequality fuelling the housing aspirations gap. 

In Sydney this year, completion of high-density schemes – those with four floors or more – is forecast to be almost 60 per cent lower than in 2019, which itself was 6 per cent below the 2018 level. 

The city has seen declining output of new homes completed since 2016 and this year, delivery is forecast to be 85 per cent below the 2016 high point.

But Knight Frank national head of residential Shayne Harris said the prime market, the affluent top five per cent of properties had fared well over the past five years and through the pandemic.

“Branded residences have seen a surge in popularity over the last 20 years and the pandemic has highlighted some of the advantages of such developments, from the lock up and leave element to the stringent maintenance procedures offered by foremost hospitality providers,” Mr Harris said. 

“The sector may face some challenges in the wake of COVID-19, but is likely to evolve in new and interesting ways.”

Among the wider population, concerns centred less on design and more on finances and survival.

Wendy Stone, associate Professor at Swinburne University and AHURI Director, said their survey showed that to achieve their ideal housing, targeted support was critical — such as assistance with up-front deposits, fees or bonds, and support to manage ongoing housing costs in the context of disruptions such as COVID.

“The Australian housing system no longer meets the needs and priorities of many moderate to lower-income Australian households,” Ms Stone told Australian Property Investor Magazine.

Only 36 per cent of young adults believe their current housing will enable them to achieve longer-term housing aspirations (5-10 years).

“When we think of housing policy, we are usually thinking of immediate pressures but we need policies that are more forward-thinking; multigenerational policies that factor in things such as the elderly staying in-home or living with relatives.

“Information is also key, with a need for more access to information for people making complex financial decisions.

“Life skills such as managing personal finances, housing loans, rent, are not taught at school and there may be justification to do so.”

The luxury property market on the other hand has seemingly developed herd immunity, delivering record prices despite the pandemic. 

Erin van Tuil, Partner, Crown Residences at One Barangaroo said, “The ‘lifestyle revolution’ that is occurring will bring with it opportunity for branded residences.

“Marketing Crown Residences at One Barangaroo, we have witnessed first-hand increased demand from buyers for this calibre of home, especially since the pandemic,” Ms van Tuil said.

“(Buyers) are drawn to aspects such as access to unrivalled serviced living and amenities, proximity to greenspace and the harbour, all while still being in the city, demonstrating that branded residences could outperform rural and coastal locations.

“Sydney has emerged on the global stage for luxury home offerings and the wealthy are looking for that next level of luxury living and the record sales achieved at the residences are testament to this demand,” Ms van Tuil said.

Developers seek cures

Knight Frank’s survey confirmed a desire to consider potential COVID-19 inspired changes, including room for home offices, more green spaces and increasingly blended mixes of private and commercial.

Three-quarters of developers are now more likely to consider advanced telecommunications and space for home offices to allow for continued flexible home working, while 38 percent indicated they were more likely to consider facilities for bicycles, compared to only 17 percent that are more likely to consider parking space availability.

While 41 percent of respondents said they would be looking to develop in a mix of locations, cities, second-home and rural areas, 45 percent said they were more likely to solely focus on cities. A third of developers are considering adjusting the mix of residential and commercial elements in schemes, from rentable desk space and individual pods to business suites.

But for 75 per cent of Australians, simply having a safe and secure home was their main priority.

“We found ‘safety and security’ were fundamental to the housing aspirations of young, mid- and later life Australians, with three quarters of respondents indicating these basic characteristics were the key housing attributes they value,” Ms Stone said.

“For a majority of Australians, these attributes were associated with home ownership.”