While the concept of working from home isn’t entirely new – some people have been doing it for years – the Coronavirus pandemic has made working from home much more widespread.
According to official Government statistics just under half of the population worked from home during lockdown. In London it was well over half.
Working from home has implications for many areas of our lives. It has implications for our working lives and our personal lives. It has implications for the commercial property market and for the economy. Here we will focus in on what working from home – or WFH as it has become to be known – means for the residential property market.
Firstly, here are a few things that working from home means in practical terms:
* Many people won’t need to commute as much as before, if at all. The interesting thing about this is that in many parts of the country the property market (and property values) are influenced by transport links and commuting times more than anything else.
* WFH needs space. A laptop balanced on the arm of the sofa might be OK occasionally but is no good for permanent homeworking. But, many modern properties including many new builds are too small to have any useful working space, and contemporary open plan layouts are totally unsuited to this.
* Good connectivity is essential for working from home, not just a nice to have. While Zoom etc. might work on flaky broadband (just) poor connectivity makes working efficiently from home very difficult in the longer term. Poor connectivity at work can mean wasted time, missed meetings and even lost deals.
So let’s look more closely at what these things could mean for the residential property market:
* Good commuter areas that are usually sought after and expensive because of that might not be so expensive and sought after anymore. Who will want to pay what is sometimes called the ‘city premium’ to live in the most expensive London boroughs if you no longer have to travel into the City every day?
The more inaccessible rural areas that have traditionally been cheap because they are not commutable might go up in value.
Traditionally seaside towns have been relatively cheap. Some even have quite depressed property markets. But many estate agents are reporting coastal properties are becoming more sought after.
* The north-south split in property pricing could narrow. Those working from home might decide they could live in, say, Yorkshire rather than the London commuter belt.
* Those who don’t have to commute might have more money to spend on their home instead. For example, a season ticket from London Waterloo to Guildford can cost as much as £4,700 a year. That could be used to take a bigger mortgage perhaps in a different area further from London. Some companies might pay their employees a WFH allowance too. These financial advantages could help to push certain property prices up in some areas.
* Large properties could become more in demand and push prices and rents of those properties up. For example, properties that have a study/office or 4/5 bedrooms could be in more demand. So could properties with space to extend.
* Small properties, with no WFH space at all, could become hard to sell or let.
* City living apartments could become particularly hard to sell or let. City living apartments generally don’t offer much or any WFH space. In addition, if their occupants don’t need to travel into the office every day anymore there’ll be even less reason to live in the city.
A recent RICS UK Residential Market Survey says that the pandemic is expected to cause a lasting shift in the desirability of certain property. They say that 83% of the survey respondents anticipate demand increasing for homes with gardens over the next two years. They say that -62% and -75% expect demand to decline for homes located in highly urban areas and tower blocks respectively.
* Connectivity could have as much of an influence on house prices and rents as quality of schools and access to a tube or railway station do now. The ability to get hyperfast broadband and 5G coverage – so people can WFH in real time – could have the same impact on house prices and rents as an Ofsted Outstanding school rating does now.
(Bear in mind though that parents will still want good schools. Connectivity will be another factor that affects pricing in addition.)
So will WFH really change the residential property market for ever?
Of course, this all depends on one thing – whether or not the working from home that has become common during Covid-19 becomes more permanent and more widespread.
Some people believe it will, and that companies will be attracted to the idea of cutting down on office space and cutting their overheads by encouraging or even insisting staff WFH.
Some people say it won’t. While there are pros to WFH there are also lots of drawbacks. It makes collaboration more difficult, can reduce productivity and can be boring!
Plus, not all jobs can be worked from home all or even some of the time. Many people will still need to travel to a workplace.
At the end of the day the most likely thing to happen is that neither extreme will happen. Most likely, commuting will still be a fact of many peoples’ lives. But many more people will spend some or even all of their working time WFH. And that’s bound to have some impact on the property market – whether you’re a buyer, seller, investor, renter or agent – that shouldn’t be overlooked going forward.