Food and accommodation work is more precarious for housing and employment: CoreLogic's Eliza Owen

EXPERT OBSERVER

When governments rolled out international travel restrictions, closed state borders and banned unnecessary travel as well as closing pubs, restaurants and casinos along with a variety of other facilities it was clear that the tourism and hospitality sectors would be some of the hardest-hit sectors.

However, it is still striking that 70% of food and accommodation employers reported a reduction in staff hours.

Food and accommodation employs about 8% of Australians, or about 1.2 million people. This is where a more granular view of employment data can highlight risks to the property market.

The detailed quarterly survey data provides insight into what industry residents work in, at the SA4 level.

The February edition suggests that most food and accommodation workers are highly concentrated in Sydney’s Inner West, followed by the Sunshine Coast and the Coffs Harbour-Grafton region.

The risk to demand-side factors for property is particularly susceptible in areas of high employment in food and accommodation, as the sector typically has more ‘precarious’ work arrangements. About 62% of those employed in the sector are employed on a part time basis, compared with the broader workforce, where 32% of staff are employed part time.

Interestingly, some of these areas also have more precarious housing arrangements, with higher portions of rental housing than ownership.

In Sydney’s Inner West, 35.4% of households are estimated to be renting households, as opposed to 31% nationally. This means that lesser hours in food and accommodation services may affect property values indirectly, because value estimates may be reconsidered based on rental return.

For Hobart, where 9.3% of the population are employed in food and accommodation, the CoreLogic home value index shows there has already been a drop in dwelling values, of -0.2% in March.

However, it is worth noting that the Hobart market was arguably due for correction even before the onset of COVID-19, having seen annualised capital growth of 7.7% each year for the past 5 years to March 2020.

Therefore, even though high concentrations of food and accommodation employment are indicative of greater risk to the property market, ongoing assessment of price and employment shifts will be necessary to isolate the full impact of COVID-19 on values. 

ELIZA OWEN is the Head of Research Australia at CoreLogic