Return-to-office mandates spark surge in housing demand
Return-to-office policies are an emerging force in the housing market. Over the next 12 to 24 months, they are likely to positively impact property demand and prices in older, more central suburbs.
That's according to Denese Zaslansky, CEO of the Johannesburg-based FIRZT Realty group, who says the remote working trend that enabled and encouraged many people to move away from cities in the wake of the Covid-19 pandemic is starting to reverse as an increasing number of companies now require that employees spend at least a few days a week at the office.
"Ironically, ongoing loadshedding until recently has also prompted many people to spend more time at the office, where their employer or the building owner carries the cost of providing backup power.
"And now, with fuel and transport costs continuing to rise and consumers continuing to resist long commutes, we anticipate that a significant number of those who moved out of the central suburbs to country towns or lifestyle estates will start to move back."
She notes that this reversal is already evident in the US, where a recent Redfin survey found that more than 10% of those planning to move in the next year are doing so because of a return-to-work mandate. Large companies such as Amazon, Apple, and Goldman Sachs are leading the drive to get employees back to physical workspaces.
"It can also be foreseen in South Africa following the release of data from the recent Discovery Bank/ Visa SpendTrend24 survey, which found that more than 75% of South African office workers now commute to the office at least three days a week - and that South Africans are driving more post-pandemic than before.
"Specifically, it found that despite taking 10% fewer trips than previously, South African drivers are covering 40% more distance per month on average, despite ongoing fuel price hikes, and attributed this directly to the increase in trips to the office, often from a further distance away than previously."
This additional travel and the accompanying fuel costs will obviously have an increasingly negative impact on the household budgets of those who now live far away from their workplaces. It is likely to make them think seriously about moving again to be closer or perhaps in a location where they can rely on public transport, says Zaslansky.
"In fact, we think this trend would already have taken off strongly were it not for the fact that many people who moved away from the cities bought their homes with bonds at much lower interest rates in 2020 or 2021 than are available now - and that it will gain huge momentum once rates start to decline again.
"However, those contemplating such a move should note that homes in many more central suburbs are currently extremely well priced - and that those prices will start rising steeply as demand increases. Consequently, prospective buyers are likely to benefit more from moving now than waiting for interest rates to fall.