From How're Going Mate To Are You Ok Mate...How COVID-19 Will Change Our Cities and Us.
Over the past few weeks I looked at a range of topics linked to COVID-19, mainly from the long-term perspective of residential property. However, a more ambitious task, is to look at how COVID-19 might change the market.
As a starting point, I’ve explored some previous pandemics. The evidence points to some far reaching effects, some of which still continue to evolve across a wide spectrum of social, economic and political corollaries.
For example, with the Spanish Flu there’s an immediate similarity because, like today, there were a number of governments in 1918 who downplayed the epidemic, namely European Countries and the USA. Surprising when we consider that the death toll was variously estimated at 17-million and 100-million.
There were 700,000 deaths in the USA alone and if aligned to today’s population would equate to 2-million mortalities. In the aftermath of the Spanish Flu, the US Congress failed to allocate extra funds for flu research. However, as we see today and despite the potential for countries to suffer widespread social and economic dislocation, politics are still at play.
The Spanish Flu epidemic also produced long-term health impacts, and COVID-19 may well do the same, although today health issues are equally focused on mental health alongside other health issues.
Pandemics do have long-term and powerful after effects and if health systems strain and fail, regions and countries can as a direct result become less affluent, in particular among the disadvantaged.
It was not until 1931 that the flu was more fully understood by which time a range of health problems had surfaced. These included a rise in tuberculosis numbers which then impacted sex ratios killing more men than women, and then affecting gender roles.
This helped to create far-reaching economic repercussions and influenced financial speculation in the 1920’s, possibly as a result of over compensation after the worst of the pandemic had passed. We are seeing similar predictions emerge now, as some commentators predict a mid-term recovery boom that could also sweep up property markets.
The Black Death 1347-1350 is another example, it may have killed one-third of all Europeans. The death toll was so great across England it took 400-years to fully recover with direct social and economic consequences, that today does sound familiar.
Recently we’ve seen almost all governments offering massive aid to save jobs and help reduce unemployment. Jobs were also an issue during the Black Death and still cast a feint shadow today. As the death toll rose there were less able-bodied workers to harvest the crops for wealthy landowners.
This created direct wage pressures and even lead to attempts to control the movement of workers with travel restrictions aimed at varied minority populations and some indigenous populations – in 2020 we see travel restricts again.
In Italy for example, a hot-spot today, in the countries north the laws on movement were restricted, and to help keep workers, landowners instead agreed to pay higher wages to keep their workers, while those in the south did not and the divide between north and south still remains.
There was also unrest in England with the Labour Peasants Revolt in 1381 which indirectly changed the monarch’s ability to raise taxes, another factor with long-term consequences.
In Australia the taxation policy has been thrust back into the COIVID spotlight including in NSW a more rigorous debate around Stamp Duty.
In its aftermath the Black Death also lead to the Renaissance and Reformation. Which eventually meant that the authority of the church and the ruling classes started to fade and direct personal responsibility and experience informed people’s lives with far-less exploitive behaviour.
Taxes, labour, unemployment, freedom of movement and health issues are just as prevalent in 2020.
Much more recently the SARS outbreak in Honk Kong in 2003 produced a positive and collective response that helped to contain the outbreak however, that’s a factor not present today. Although as a society that’s exactly what we are being asked to do; to act for the collective good of society, it’s a sentiment that enables lockdowns, but it also highlights some failures like our neglect of the elderly.
As we look for lessons and a possible road-map from past events we can see that pandemic related events can slowly ripple for decades and even centuries.
Today however, carried along by modern communications, events can evolve and become overnight a tsunami of change, some of which (leaving behind politics) we are already experiencing – so let’s explore some of those directly related to how and where we live.
The Built Environment
Although Australian’s are very fond of the outdoors we still spend a lot of time indoors. In offices, in shopping centres, cinemas and not forgetting at least until recently, lots of time spent in cars, aeroplanes and trains. And we do now of course spend a lot of time at home.
And while time spent indoors may well have shifted during COVID-19, the importance of our built environments is a good starting point.
For those of us living in urban areas during various stages of lockdowns, the percent of time spent indoors may have greatly increased. This has had an immediate impact on how we value easy access to quality public and green spaces and how this has become critical to managing mental health.
The trend has made open space a critical factor for many in the property market.
According to the World Health Organization, the built environment accounts for 19% of factors that affect our health and well-being, that’s almost equal to the impact of genetics which accounts for 20%.
Our urban and regional parks, right up to national parks have become super popular destinations, often leading to overcrowding. The pandemic has clearly highlighted the importance and value we place on both public and private open spaces in and around our homes.
Along with the need to maintain good health, there’s a resurgence in the value we place on open space, and this is set to be a stronger and longer-term impact on the location and design of all housing.
Flowing on from this very local and domestic trend across many boardroom tables we’ve also seen big movements in environmental awareness with big corporate names like BP, BHP and many others setting very big environmental target. With BP for example this will completely change their business model towards ‘green-energy’.
Like a number of other COVID-inspired trends, changes impacting the retail sector were already apparent that COVID-19 has acted to super-charge.
Online shopping is a prime example. One directly related example has been the explosive growth of supermarket online sales both for home delivery and click and collect with pick up slots far more common as the design of supermarkets start to change.
Given the strong performance of supermarkets we may start to see some longer-term product diversity as well as more locally based shopping. And supermarkets will evolve well beyond the heightened our awareness of the narrowness of the food aisle.
Everyday basics may well move online and stay there with contactless delivery, as was once common for bread and milk. However, beyond the basics, local shopping may be re-energised as the population moves to greater use of local facilities within easy reach.
The faster move to online shopping is also forcing the more rapid development of automated delivery services. However, smaller and independent retailers are also able to benefit from this trend as new and easy to access web-based platforms are helping them to independently drive sales.
The impact on large retail and shopping centre landlords and shopfront employees has been far less positive. As a result, the structural changes impacting retailers and how and where many of us shop, looks set to be a very big, interesting and lasting legacy.
The banking sector is at the pointy end of change that will extend way beyond the various measures introduced to support their customers during the height of COVID-19.
While bank customers will eventually have to repay their paused loans and various rebates, some longer-term changes are here to stay, and change is set to continue at a much more rapid pace. Several major banks have already announced that technology will be their corporate and customer driving forces.
COVID-19 has almost overnight seen consumers desert cash, either by choice or as a requirement of retailers and services not wanting to accept cash any longer. Less cash in circulation will mean even less bank branches, reduced use of ATMs and fewer front-line staff. However, why this is important relates more to how we use and move cash in our everyday life than it does on the older model of staff assisted banking.
The transformation of Tesla into a bigger business, valued more than US retailer Walmart, is a telling indicator. This tells us that a lot of our urban infrastructure is now ‘old-hat’ and that cities are going to have to play catch-up with new transport trends post-COVID.
This may at first help drive car sales as there’s less reliance on public transport however, as markets settle and we see workers commute less often, the ownership of cars may change. Self-drive and possibly shared cars will become more common as we also walk locally or continue to see a rise in demand for bikes.
Cycleways are a tried and tested piece of infrastructure, with more being rolled out and even more in major cities. Due to its skyrocketing popularity, there is now a worldwide shortage of bikes and parts.
However, cities must be sure to deliver transport infrastructure equally to avoid further amplifying social disadvantages or create new traffic congestion. Transport has always been a big cost to sustain urban expansion and so a shift in personal and work related travel patterns will have an impact. Less personal travel might help make room for home-delivery services to our personal and possibly automated delivery points.
Varied transport patterns, and this includes how often we fly looks set to re-shape urban areas post-COVID.
Education both schooling and for universities has been another hot-spot since the start of the pandemic, it’s also been a very sensitive political and social issue.
However, if we think of the importance attached to schools as a driver of housing demand and real estate values, changes in the education sector has the potential to change the demand for housing and how homes are designed.
And as was the experience with past pandemics the same trend may well impact gender roles. This sector is yet another example of where COVID has forced the pace of change.
How fast the pace of change might be will be driven by demand. One example comes from a university that offered 2000 new online course places and in response received 70,000 applications.
Media & Publishing
COVID has greatly impacted almost every form of media. While traditional media has seen big changes, mainly driven by falling profits as a result of greatly restricted consumer freedom and spending, the move to digital has been the focus for many years.
Although falling advertising has also impacted the digital platforms, the closure of many local and regional newspapers and the consolidation of free to air news services is a far less positive media trend.
The Age of WFH
While ‘work-life balance’ has always been a priority for Australians, it remained for many of us, a bit of a pipe dream. Now COVID-19 is forcing us to ask if we can be truly productive at home, away from the office for long periods?
Overnight, this question has become top-of-mind as the pandemic sent a big part of the workforce to WFH. It appears many of us like the idea, so much so that it looks like becoming one of the lasting legacies of COVID-19.
Despite the circumstances, there’s strong evidence to support the idea that people enjoy working from home and many say they’re even more productive.
However, less positive is that many young people report struggling with the idea, perhaps missing the social interaction or WFH is not fun if you’re living in shared accommodation.
Older workers appear happier, one reason being less commute time, and even a willingness to consider living in more remote areas as a bonus for far less travel.
For the office development and investment community, the combination of even mid-term higher unemployment and WFH is not a happy combination.
Homes: Adaptable and Flexible
If more of us WFH and for longer periods, then it’s logical that there’s going to be an impact on how we design and build our homes. If your home comes with a purpose built, internet connected and private office, that’s great.
However, if that’s not the case than a possible was to help keep everyone sane and improve home life after you’ve been forced to WFH for months on end or even longer, is to create greater flexibility with adaptable space.
While it’s true that more room, bigger houses and apartments might be possible, that is set to be a more expensive exercise. However, well designed, flexible and adaptable spaces look a more affordable and accessible and long-term solution.
It’s almost a given that new master planned housing estates and apartment complexes will be developed to be better suited to pandemic conditions that facilitate home based work.
In the immediate future we may well see developers and architects experiment with many possibilities. We can see an example when it comes to lot sizes for homes and medium-density development where if you cannot have or afford a traditional garden, then you can build a rooftop terrace or balconies or courtyard. It’s an easy idea to apply to internal space.
COVID-19 is setting us the task of future-proofing our homes means abandoning fixed ideas about how we use space so that we can determine how spaces are used. At some price points to accommodate more ‘working space’ we might see a greater focus on shared quality community spaces.
The reimagining of residential developments has already started, and one example includes how townhouses, with their rising popularity might change post-COVID. An immediate impact could include an expanded ground level courtyard with a delivery portal for online shopping deliveries, while balconies are re-shaped into a two story terrace. To help redesign the ground level the garage might go as car-share services and even more use of bikes creates less demand for personal garage spaces.
The town home laundry cupboard would become much bigger, a dedicated clean up room near the entry, and should we expect a much bigger pantry for stockpiling groceries, and a now common idea of “flex room,” that can easily be used for home schooling, home offices, and other uses made possible with extra storage.
With larger detached homes the trend of big open multi-use rooms might be an out of date trend, because it put everyone in the same shared space.
To make up for the shortfall and cost of dedicated rooms, homes with lots of divided spaces might become popular.
However, away from the traditional family home, housing key workers on the rooftops of existing developments has been suggested. The idea allowing nurses, for example, to live near hospitals. An idea that highlights the need for cities to provide quality affordable housing for essential workers.
That’s already an often discussed need that will certainly outlast the pandemic.
Cities Inspire Us.
Cities offer us inspiration; they also offer times of frustration. And it’s here that we should remember the important role of the arts and culture that impact cities from the grassroots to Broadway. The electricity of a shared experience from a footy match to the opera, inform and nourish our cities. Such activities have been battered by COVID but must not be neglected.
People have always loved urban living from the CBD to the suburbs, we like the personal freedom however, post-COVID we need to address changes and deliver the right infrastructure to sustain our cities.
While we might see home designs change, big open spaces falling out of favour, his & hers, or his & his or hers & hers bathrooms and dressing rooms becoming ‘h & h’ offices.
Our backyards might become the destination for staycations, alongside a big jump in multi-generational living, the role of home and community post-COVID will have to adopt and become more flexible. The pace of change looks set to take-off and force flexibility.
The current crisis feels like a crucial opportunity to make the changes that will put us all in better stead to create a more equal, climate resilient, and caring society where, how’re going mate becomes are you OK mate.
And to do so, our cities and governments must sacrifice conventional systems of control, opting instead to work toward a better future and better cities post-COVID.