Is it time for ‘Work From Home’’ to be stopped?

BY GARETH KENT, Director, Preston Rowe Paterson Geelong

As we head into a new year, with a federal election coming up, the big issues are shaping up as being productivity and the lack of front line services workers.

Both these issues have been triggered by our collective shift to a “work from home” (WFH) culture, and responses to Covid-19 policies. Productivity is essential to our way of life and a key factor in economic growth and living standards. The Productivity Commission has released a damning report with Victoria leading an 18 year low nationally.

Government employee levels are at an all-time high, with more people working for the Government than ever before at all levels – local, state and federal. This is resulting in a workforce transition, for every job that is created within the Government bureaucracy, jobs are being lost in the private sector and front line services.

The commission is pointing the finger at government policies set during the pandemic, Governments at all levels have employed more people to do less work, and we are paying for it!

The Victorian Police Force currently faces a shortfall of 800 officers; a Victorian Education Department report recently forecast a shortfall of nearly 5,000 teachers by 2028 and Victorian hospitals are reporting record levels of nurse ‘’burnout’’ as they struggle to fill nursing positions.

Very simply, why would you become a police officer, teacher or nurse when you can get a job with little or no training, and earn a higher wage, in one of the many Government authorities with conditions such as working from home with little oversight and limited ability for you to be appropriately managed? There is a direct correlation between a lack of interest in more challenging front-line jobs and the continued employment of young workers in high-paid Government roles.

Our region has been significantly impacted by the shift to the WFH culture. As this took hold across Melbourne, many working people took the opportunity to move to our region and purchase homes along our coast and in our affluent suburbs. Property values skyrocketed – Torquay, Ocean Grove, Anglesea, Lorne and Barwon Heads increased by 30% to 45% in a 2-year period from 2020 to 2022.

Since the private sector has in some part demanded at least a “3 days in the office policy”, we have begun to witness the opposite effect of this migration. With many of these people now facing a return-to-work scenario, demand for property in the coastal markets is as low as I have seen in the past 25 years. And over the Christmas period, which normal attracts an active market, it has flat lined.

Likewise, in our Geelong CBD, the exodus of workers has had a real and lasting impact. The CBD is in a terrible state. Between the major government insurance agencies – WorkSafe, NDIS, and TAC, plus our local council and DWELP, upwards of 4,000 employees no longer attend the office, and if they do, it is only for 1 or 2 days a week.

The impact on the small businesses within the CBD has been immense. Hospitality, dry cleaners, coffee shops, restaurants, retail, hairdressers, etc, etc, have all suffered from a distinct loss of foot traffic. And commercial property values, and rentals, have plummeted at almost the same rate as the residential values went up along the coast. In my opinion, property within the CBD is now worth less than the land value, and represents a great long-term investment opportunity, as long as you can hold out for the change.

Reading the tea leaves, I do believe that we will shortly see some change of policy in regard to mandated returning to the office. This might be a hybrid model of 3 days a week or some other variation, however this cultural change will signal the shift in how we live, and that will flow through to the way property values behave.

These social shifts always have an impact on property values, and getting ahead of the shift is risky, and difficult to read, but comes with great reward.