The future of work: How evolving skills are reshaping housing preferences

Evolving skills are reshaping housing preferences. Picture: David Swift

The location of our workplace has always been an essential aspect of housing preferences. It also depends on the nature of employment. We often select our residence based on how long we are willing to commute and then consider significant factors such as affordability, education, transportation, safety and more.

By examining the changes in work patterns, real estate developers and investors can gain valuable insights into the housing market’s future.

At present, we are facing the question of how the latest advancements in technology, coupled with the changes in the way we work as a result of the pandemic, will impact the future of work, and consequently, our way of life and housing choices. Let’s delve into the data and answer this.

In Australia, every job is assigned a skill level between one and five, indicating the amount of formal education and experience required to work in that job.

According to the latest ABS labour force data, in November-2022, our workforce consisted of 13.8 million workers. Of these, 34 per cent worked in skill level 1 jobs, 11 per cent in skill level 2, 13 per cent in skill level 3, 26 per cent in skill level 4 and 15 per cent in skill level 5.

Over the period of 10 years leading up to November, skill level 1 jobs increased by 38 per cent, while skill level 5 jobs increased only by 5 per cent.

Projections for the future align with this trend. According to the latest data published from the National Skills Commission, 53 per cent of job growth between November 2021 and November 2026 is expected to be in skill level 1 jobs.

One of the main reasons behind the move towards a knowledge-based economy is technological change. Automation and digitisation have enabled us to perform certain tasks with more efficiency while also improving safety in certain industries like mining, manufacturing, construction by reducing human exposure to harmful chemicals, high temperatures and risk of physical injuries.

Office worker numbers are slowing returning to the Sydney CBD following Covid-19. Picture: Damian Shaw/NCA NewsWire

While technological advancements have resulted in some job roles becoming obsolete, it is crucial to acknowledge that a completely new set of non-routine jobs have also emerged concurrently.

For example, bank tellers were made redundant by ATMs and NFC, but today, banks are required to hire app developers, cybersecurity specialists and data analysts.

It is key for us to understand that only a certain type of tasks can be automated, and human presence is still irreplaceable and essential in most cases.

Jobs in general can be classified as routine or non-routine jobs based on the repetitiveness of the tasks performed in the jobs, and as manual (jobs requiring more physical effort) or cognitive jobs (jobs requiring intellectual effort and real-time problem-solving skills).

Routine jobs, both cognitive and manual, are more susceptible to automation.

This is because they often involve repetitive tasks that can be performed by machines with a higher degree of accuracy and consistency. These jobs typically do not demand a high level of creativity, critical thinking or decision-making skills that are difficult to replicate in machines.

Data from RBA shows that the proportion of workforce in routine-manual jobs (e.g., assembly line workers and data entry clerks) and routine cognitive jobs (e.g., call centre workers and bookkeepers) has been decreasing since 1986.

While the proportion of non-routine cognitive jobs (e.g., architects and medical professionals) and non-routine manual jobs (e.g., firefighters and nurses) have been steadily increasing over the same period.

When we look at jobs from the perspective of skill levels, data from RBA shows that only 5 per cent of the jobs in skill level 5 were non-routine and have the least likelihood of automation. In skill level 1 almost all the jobs were non-routine in nature and hence has the least risk of automation.

It is clear from this data that the future of work is largely aligned with non-repetitive and non-codifiable work where care, computing, cognitive and communication skills will be the winners.

The impact of the changes in workforce on housing is likely to be complex and multifaceted. Based on the changing workforce trends, there could be new market segments emerging for the property industry.

Higher education will be key in the coming years, and technology may even complement workers involved in highly skilled occupations, improving their productivity and hence the demand for such workers.

To align with the demands of the workforce, engagement in higher education is likely to rise. This means more demand for student housing.

The Centre for Population released population forecasts based on the 2021 census data. According to this data, the 20-29 population is expected to grow by 667,800 (21 per cent) between 2023-2032. This data along with the workforce trends suggests that the demand for student housing as well as inner-city apartments for graduates will continue to rise.

Lower skilled workers might need to upskill, retrain and redeploy into roles that intrinsically require a physical presence. Affordable housing in university precincts and commercial property for training centres will increase.

Pandemic fuelled flexible working trends including work from home are here to stay. To some extent, the four-day work week model might also be tried and tested in some organisations. Workers who enjoy flexible working conditions will continue to occupy outer suburbs and treechange and seachange zones.

The demand for affordable family sized homes in the outer suburbs will surge and this will further be fast tracked by demographic trends. With millennials moving into their family formation stage, they will require a more spacious environment, with access to outdoor amenities and recreational activities.

As a result, the demand for small businesses and services needed to support the influx of population in these areas will demand not only residential property but also commercial spaces. While many office workers have been able to transition to remote working over the last two years, there are many office-going workers who cannot work from home.

The lion share of highly skilled jobs is likely to cluster in the CBD office towers. The ABS classifies all jobs into 460 occupations, and only 110 of those jobs have any capability of being performed remotely. Many knowledge workers such as doctors, lawyers, engineers, government workers, bank employees and teachers will still be required to commute to work.

Office worker numbers in the Sydney CBD. Picture: Damian Shaw/NCA NewsWire

The increasing office workforce will also create a surge in the lower skilled jobs that are required to support the CBDs, such as baristas, chefs and office maintenance workers. Inner-city apartments and affordable rentals closer to the city will gain more traction as these trends unfold.

The future housing market will be significantly affected by changing trends in skills. As routine jobs become automated, the demand for housing in areas that were previously industrial centres or factories may decrease. As a result, housing preferences may shift towards urban areas, where there is a greater demand for non-routine jobs requiring creativity and critical thinking.

Workers with flexible working arrangements might seek suburban and lifestyle zones. Housing affordability will remain a critical issue for lower skilled workers, and this must be addressed with the development of more affordable housing.

A diverse range of housing options will be required to meet the needs of a changing workforce, and housing developers and urban planners will need to anticipate these changes and adapt their offerings accordingly.

Hari Hara Priya Kannan is data scientist with The Demographics Group