Work-From-Home Culture Seems To Be Changing How We Shop for Homes

work from home

The pandemic has had a huge impact on our day to day lives in Singapore, and not just because we now have to wear masks everywhere. Working from home has become the norm rather than the exception, and in time to come, may have a huge impact on the homes we choose to buy or rent.

For a long time, “location, location, location” was the mantra of prospective property buyers and investors, often trumping other concerns such as size. The sky-high prices in the city core reflect the premium that a central location has been able to command.

But with fewer people having to commute to work these days, patterns of demand look to be shifting. It’s hard to predict if this behavior will persist, but there already seems to be early signs of more buyers preferring larger homes in less central areas. 

 

Demand is moving away from the central region

In fast-paced Singapore, property buyers have been willing to pay a premium for being able to get to the city centre in as little time as possible.

The high price of cars has in all likelihood boosted further the demand for homes that are well-connected to the city centre by public transport.

As a result, properties in or near the central region have traditionally commanded high prices. A property’s connectivity by public transport also typically has a significant impact on its value, with homes located close to MRT stations enjoying higher demand.

Did you know? You can search for properties on PropertyGuru by proximity to MRT station!  

But reduced commuting thanks to working from home and flexible hours is already shifting patterns of demand. Workers’ willingness to pay a premium in order to reduce commuting time falls as they shift to remote work.

The trend of decentralised work looks set to reduce demand for properties in or near the Core Central Region (CCR), which until now has seen elevated rents and property prices.

Early signs of shifts in demand have already appeared. The flash estimate of the price index for private residential property in Q3 of 2020 recently released by URA showed a decrease in prices of non-landed private residential properties in the CCR by 4.9%, stopping a previous upward trend in its tracks—demand for CCR properties increased by 2.7% in Q2 of 2020.

Falling demand for homes in the CCR has translated to higher demand for homes in the Rest of Central Region (RCR) and the Outside Central Region (OCR).

The RCR, which can be defined loosely as covering city fringe areas, saw a price increase of 3.3%, reversing a 1.7% decrease in the previous quarter.

Meanwhile, the OCR, which encompasses the rest of Singapore, saw a 1.7% increase in price, compared to just 0.1% increase in Q3.

This is just the start of what could be a massive change in property consumption patterns. In the coming years, a growing number of businesses might move their premises away from the CBD, finding that they no longer need large swathes of office space in a central location.

Related article: Defining the CCR, RCR and OCR in Singapore

 

Greater demand for spacious homes

Singapore residents have long been willing to sacrifice a bit of space for the convenience of an easy commute. After all, many are used to spending more time at the office than they do at home.

But the pandemic has accelerated a shift in working patterns from the office to the home. More people than ever before now work from home at least some of the time. And some have discovered that their homes are ill-equipped to double up as offices.

Space is scarce in Singapore, with the average 4-room HDB flat measuring about 90 sqm. Based on the average household size for such flats, each person only has about 28 sqm of space.

The layout of the typical HDB flat does not help either, as it tends to consist of small bedrooms in order to free up space for the living and dining area. In a household in which multiple people are working or studying at home, this presents problems of space allocation, as those who need a quieter environment for videoconferencing or e-learning have to retreat to cramped bedrooms.

As working from home becomes the norm, there could be greater demand for more spacious homes that can accommodate multiple workspaces.

In fact, housing data from the second and third quarter of this year already show a dip in demand for shoebox apartments, and a rise in interest for larger units. The proportion of new homes under-500 sqm sold dropped from 14% in the first quarter to 10% in the second. On the other hand, the monthly sales of units above 1,200 sq ft consistently exceeded 100 from June to August. This has not happened since January 2019.

Related article: Singapore Consumer Sentiment Study H2 2020

Moving forward, households may continue looking for homes with more spacious bedrooms, or additional bedrooms which they can convert into a home office or study room.

With the average person spending more time at home than ever before, having a more spacious abode could also become a bigger lifestyle aspiration than being able to live in the city core.

Spending on renovations and home furnishings is also likely to pivot to reflect these changes in preferences, as people start to prioritise home offices as well as lifestyle-related facilities, with more residents turning to home entertainment systems and gym equipment, for instance.

In 2018, URA set out new guidelines for condominium developments designed to halt the shrinking of space. These guidelines include a cap on the maximum number of units per development to discourage developers from building tiny shoebox units, and mandate a minimum average unit size of 85 sqm in OCR, as well as a minimum of 100 sqm in selected areas.

 

Working from home is likely to shift priorities from location to space

As more and more people opt for city fringe or suburban areas and spend more time in residential estates rather than the CBD, businesses are likely to relocate, too.

This could lead to an equalising of prices in central and suburban areas and accelerate the government’s attempts to encourage decentralisation.

While residential estates look set to become more vibrant, the CBD is likely to continue to experience falling property values as businesses relocate away from the city centre. As prices fall, the city core could become more accessible to residents, transforming the CBD into a mix of offices and residences.

 

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