Macquarie Park is one of the Sydney areas that could be more vulnerable to AI changes.
They’re the Sydney areas at risk of becoming the AI “rust belt” – suburbs where high numbers of residents could leave and home prices fall as job automation ripples through the workforce.
An alarming new study has revealed multiple Sydney pockets have a high concentration of workers in roles that could become automated through AI processes in only a few years, resulting in job losses.
These were areas where the majority of residents worked in white collar sectors with a greater exposure to AI, including finance, insurance, telecommunications and professional services.
Sydney as a whole, along with Melbourne, was also forecast to be most impacted by AI-fuelled changes in the workforce, according to the study by research group SuburbTrends.
This was because of the higher volume of workers relying on white collar jobs to pay down pricey mortgages.
Many jobs being replaced by AI technologies would mean large numbers of residents potentially needing to sell up their homes and move elsewhere, the study revealed.
SuburbTrends data scientist Kent Lardner said AI was evolving rapidly and “rust belt” suburbs could emerge if workers had few pathways to transition into new industries.
“You would have suburbs that emulate the rust belt towns of the US, where they exported manufacturing jobs,” he said.
“This time it will be exporting white collar jobs. The real risk is we end up with our own rust belt, where a mass of people are leaving, or selling their homes at once because they’ve lost jobs.”
Among the wider city regions most exposed to workforce changes was inner Sydney.
At a postcode level, the most exposed market in the country was Erskineville-Alexandria, followed by Manly-Fairlight and north shore areas Lindfield-Roseville and Crows Nest-Waverton.
All were regions home to a high number of people working in professional, scientific and technical services, along with financial and insurance services.
Eighty per cent of roles in these industries were forecast to be impacted by AI in the coming years.
Other highly exposed areas were Schofields, in the Blacktown region, and Macquarie Park-Marsfield, in the northwest.
Mr Lardner said the impacts in these areas would be variable and much would depend on the speed of job losses and when people bought their homes.
“Someone who has owned their home for many years will be less affected than someone with a new mortgage,” he said.
“Some people will be able to easily retrain and find another job. For others it will be harder. It’s that transition after job loss that will matter.
“The real danger is when you have a lot of workers concentrated in the same industries where there will be job losses, who also have new mortgages with high loan to value (debt).”
Mr Lardner said areas like Macquarie Park and Schofields were especially vulnerable because there were more homeowners with new mortgages.
Conversely, beach areas like Manly and Coogee-Clovelly had many workers in AI-affected industries but local residents tended to have bought their homes decades ago and had higher savings.
Property Investment Professionals of Australia chair and buyers’ advocate Cate Bakos said AI-related job uncertainty could influence buyer behaviour.
“You don’t see an entire suburb empty out overnight,” Ms Bakos said. “But in suburbs where many people work in similar industries and have high mortgages, that’s where pressure builds.
“Elevated listings, heavy discounting, vendors competing against each other, those are the big red flags,” she said.
Buyer’s agent Nathan Birch, who leads up the national property group Binvested, said one of the more obvious impacts of AI will be on the commercial property market.
“There are already issues with trying to rent out very large office spaces because of the work from home trend,” he said.
“If you think of where a new rust belt could be, where AI could have the biggest impact, it would be offices.
“(AI) could mean even more people working remotely and fewer staff. It could impact the value of commercial office space.”
Mr Birch said the safest suburbs to buy into, from an investment point of view, would be blue collar areas where prices are much cheaper than the norm.
“A good sign is if a Centrelink payment would be enough to pay rent in the area,” he said.
Professor Janine Dixon, director of the Centre of Policy Studies at Victoria University, revealed earlier this year that the picture for AI was more nuanced than mass unemployment.
“There will be a lot of opportunities elsewhere in the economy,” she said, adding that roles in health, education, care and construction were less prone to automation and could see growth.
Suburb Trends founder Kent Lardner.
Mr Lardner said governments needed to wake up to AI shifts in the labour market. “Other countries … are already designing concrete transition pathways for workers; that’s the gap we now need to close.”
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