Impact of WFH trends on housing market

[HangTime]

Curious as to what people think may happen with the housing market given the increasing trends towards people working from home. Currently there is a strong bias towards the commuter belt i.e. homes that give quick access to traditional employment hubs (e.g. City of London, Canary Wharf) that drives up prices because of the demand from city workers on relatively high income. A few years ago I was seriously considering moving nearer to London with commute being the only driver really. It never happened but since then I periodically fantasise about it (lots of window shopping on Rightmove, researching locations etc), but now I think I'd be content to stay where I am (to provide stability for young children etc).

Looking ahead we are seeing organisations taking a stock check around working practices as a result of the enforced WFH that came about due to the pandemic. My expectation is that (in some sectors at least) this becomes a long-term trend whereby it is no longer expected that employees are in the office 4-5 days a week. As a consequence the benefit from living somewhere with rapid access (e.g. near a mainline train statiton) to such working hubs is reduced.

What I'm not so sure about is how these changing patterns will impact on the housing market. I would expect it to mean more people prepared to compromise on commute (because they do it less frequently) and thus reduce the imbalance in house prices by location - i.e. increase demand in areas where housing is cheaper because those who previously ruled those areas out for being too far from the office may now consider them. So for example some people might be unhappy with a one-way commute of over 2 hours but if they only do it once or twice a week maybe they would put up with that to secure a bigger house in a nicer area in proximity to good schools, green spaces etc. Also it might reduce the premium on properties near a train station (although this clearly won't be eliminated as it is still desirable to a lot of people). However I would not expect this to happen rapidly, more of a gradual change with London still being a desirable and hence expensive place to live near for other reasons.

In essence I think 'nice places to live that aren't near major employment centres' become a lot more appealing and could start to see a bit of a boon as some people flock there to get the quality of life (outside work) they crave. What do you think?

I guess there's then some other factors like people wanting more space at home so they can setup home offices etc, but that's more of a universal trend that something that could vary by region.

Finally there are some Covid-19 factors that influence this (e.g. viability of public transport) but really for this thread I'm thinking more longer term on the assumption that restrictions are relaxed and things return more to 'normal' at some point.

 

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Yes the above largely echoes my thoughts, my employer wouldn't have been brave enough to go all-in on WFH but because their hand was forced (to be fair, they brought it in themselves a week before lockdown was announced) and it has proven to be reasonably effective, it's an avenue being investigated.

In terms of flexible office space, places like WeWork were already doing a land-grab over the past couple of years although I seem to recall they were making pretty heavy losses. Will be interesting to see how this develops.

One area I'm less sure about is internet driving house sales; I think of it is a hygiene factor i.e. you need it to be 'good enough' but there are quite diminishing returns beyond that point. Things have improved a lot over the past decade to the extent that the vast majority of homes already have access to reasonable broadband, and we already have a USO in place that I think allows you to demand 10mbit download / 1mbit upload which should be fine for virtual desktop environments and is capable of video conferencing (albeit your upload means your quality won't be perfect). Whether you have 50mbit or 500mbit really doesn't make much difference. I would argue that Internet service is much less of a differentiator compared to commute times (e.g. proximity to railway links) has historically been, because the majority of homes can get decent internet whereas the majority of homes do not have good commuting times. Yes you'll get a handful of 'not-spots' that might suffer but I see that more of a case of say 5% of homes suffering downward pressure on prices due to rubbish internet compared to the traditional model where a small proportion of homes are desirable due to their good commuter links.

I'm saving about 18hrs/week on commute time at the moment. Ironically that actually makes work more hectic because I'm no longer working on the train; I used to do about 3hrs work a day whilst commuting. So whilst my productivity during working hours hasn't been impacted much, my overall productivity has as I'm not top-and-tailing the working day with much extra working. That actually raises an interesting point about whether in future commuting time will start to be considered as working time for some places (e.g. say you normally work 9-5 from home but then a few days a month you commute into a central hub, rather than being expected to turn up at 9am maybe it could be later than that).

 

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To be fair though you shouldn't really be working on public transport mainly due to DPA

Depends on what you are doing surely? If you are sat looking at personal / sensitive data with someone in the adjacent seat peering over your shoulder I can see a risk, but reviewing a document or preparing some slides or whatever around generic content can't be that big an issue.

Fellow wallington-er! We get off quite well in terms of price around here considering the distance and transport to London. I think more folks will move out to this ring (zone5/6) around London. A bit longer commute but a bit less days in the office to save some cash and get a less metropolitan vibe.

This was one area I considered in my window shopping a few years ago, around Carshalton Beeches etc, but in the end I was a bit worried about proximity to Croydon (crime etc) and not ideal for visiting family compared to locations further west. Also whilst reasonably priced compared to some other areas in Greater London it was still towards top end of budget. Definitely works from a commuting POV though, I could halve my commute with a house fairly near the station there.

I imagine the demand for places on the coast/other beauty spots may well increase rapidly and if anything it could be a big boost for places which are usually only seasonal like Cornwall where they get an influx of permenent residents rather than just holiday lettings. Providing they can improve infrastructure.

I'm led to believe Cornwall has excellent broadband (one of the first areas to really push a fibre rollout) so certainly should be feasible, but I guess it depends how much travel people need to do.

 

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Yep - another option I had given consideration was buying a two bedroom flat in London so I could rent one room out and use the other as a pied-a-terre for a few days a week. But it was hard to find someejrtr nice in an area that wasn't a ****hole for a reasonable price and definitely don't see the appeal now.

I guess ironically we might see an influx of people into more central areas if there is some office space converted to flats and prices fall a bit, making it more affordable for the people that do need to be in city centre for work.

 

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^I think a bit less London centric but you've got to consider that London will always carry a certain appeal, it's got status, top jobs, attracts a lot of foreigners, massive leisure scene etc.
Flats are attractive because of the cost / proliferation in certain areas, most buyers over a certain age probably want a house already, unless they have some fancy apartment building with onsite facilities like concierge, gym etc. That said, maybe you'll have an army of people who say actually I no longer want a 1-2 bed flat in the centre I'll instead look for a house out in the sticks for the same money, because I'm not going to need to travel that much.
Not sure about gardens, generally people either make the garden a priority or they don't, regardless of where they work.
The family areas, basically what I'm saying is perhaps the 'commuter belt' expands. Traditionally you have the people in Surrey, Hertfordshire, Sussex etc commuting in to London, these are people who want bigger houses with gardens in nicer areas, but they are historically a bit constrained by needing to get into the capital. So they can't venture too far away and as house prices in Greater London have soared over the past 20 years or so more and more people have been pushed into those areas making them quite expensive in themselves. As I mentioned earlier I spent a long time looking online at houses in various areas (thousands of houses) but even the areas people talk about as areas 'Londoners move out to' can be prohibitively expensive even on a City wage if you don't have the huge equity to cash in from a London property. But now people may take the view that well, I no longer need to be within an hour's train ride to London. I'll go somewhere two hours, three hours away where previously there were very few commuters driving up prices. I currently live beyond the boundary of what many consider acceptable as a commute (4.5hrs round trip) but maybe these sort of places will hold more appeal in future.

Will be interesting to see how rail passenger numbers are affected in the medium-long term. Makes you wonder about HS2, doesn't it?

 

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Joking aside, I've anecdotally heard of people doing similar in the past (pre-covid). Make your holiday home your primary home, and rent the 'normal' home out to people that need to commute for work

 

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Or they forget about all this in 2 years time and go back to old habits.

I can see there potentially being some organisations where decision makers feel their organisation is suffering as a result of remote working (reduced productivity, whatever) and trying to backtrack. But it's a difficult thing to do once you've got most of the workforce moved over to remote working to suddenly bring them back into the office, especially if some of them live now a long way from the office. There's also a real risk that luddites will get left behind in the labour market, with the top talent being attracted by rivals with more flexible approaches.

Up until March my division was perhaps spending 20-25% of time WFH on average, currently 100% and based on the latest discussions I envisage it being about 75-85% when things return to 'normal', although that might change.

 

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By my calculations:

Old office = 120% allocated (example 60 people, 50 desks, 10 WFH on any given day)
New office = 200% allocated (example 60 people, 30 desks, 30 WFH on any given day)
New office at 3rd of capacity = 600% allocated (example 60 people, 10 desks, 50 WFH on any given day)

So not sure where you've got 1 person in the office for every 10, it should be 1 person in the office for every 6 people surely? One day in the office every 6 days not every 2 weeks.

 

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Training is a big hurdle for any company in these times - we've seen absolutely zero hiring for anyone other than mid- and senior-level staff. No juniors whatsoever have been brought on board, as it's a nightmare trying to train people up.

On-boarding is one of my main concerns about remote working. We've effectively frozen all recruitment unless specific exceptions are granted by ExCo (for key areas that this pandemic has increased the workload for) but as and when that changes it will be tough to get people on board effectively. Other teams in my division had a small handful of people we'd already offered to who have had to join shortly before or after lockdown and it must be tough for them in terms of relationship building, knowledge transfer etc. I'm keen to learn how other organisations manage this sort of stuff as I'm sure there's some generic pointers that could help.

Our office is 'open' from September but at 10% capacity under current guidelines, I can't see a return until 2021 at that rate, the more that work at home the less point of an office, key benefit of the office is it being a hub, if you have a pattern of 40-60% WFH the likelihood of the right people from the right areas being in the office at the same time is extremely low

I think you can mitigate that slightly (not completely) by careful planning in terms of understanding the interconnects between people/teams and having appropriate rotas in place (which you kind of need to do anyway for capacity reasons). The more 'matricised' (if that's a word) an organisation is the tougher than becomes I imagine i.e. not simply a case of sending functional team A into the office on these days if some of that team interact with team B, some with team C etc. And of course you need to recognise and actively embrace the fact that not everyone will be physically present, so VC is used in all meetings etc and just becomes second nature, rather than an afterthought as it sometimes was traditionally ("oh yeah, Joe Bloggs is WFH today, can someone dial him in?"). You also have to look at scheduling of activities i.e. ensure the meetings that benefit most from F2F interaction are booked for the days people are in the office, where feasible (this lends itself well in situations where teams are working on iterative cycles).

 

[HangTime]

Seems like it is a thing - maybe I should've put my money where my mouth is and looked to invest in rural property:
https://www.bbc.co.uk/news/business-53670199

 

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The article has been updated since I posted it, used to have a completely different headline more focused on people moving out to the country but they have revamped it to focus on this person in the first paragraph for some reason.

Imo commuting into London is just the worst of all worlds. If you really want to work in London, then live in London. If you don't want to live in London, then work somewhere else

The problem is living in London is either unaffordable or comes with too many compromises for many people. You basically have to end up living in a rubbish house in a mediocre area and still have to use public transport to get to work. So you have a paradox, you want to work in London but you don't want to live in London. Getting well paid jobs outside London isn't that straightforward, there is only so many to go round (depending on sector obviously). Commuting has improved in recent years due to WiFi and being able to watch film/tv on mobile devices etc, plus part of the point of this thread was looking at frequency of commute, 4-5 days a week is a bit different from say 1 day a week.

 

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See in my experience London public transport is good for a major city. I'm not that well travelled, and maybe I just don't know the best routes, but I've generally been disappointed overseas. Take Rome for example, when i visited it only had two metro lines in a sort of X layout, the third line being constructed was constantly delayed by archeological finds. New York, Paris, Stockholm, Sydney, Hong Kong none of these places blew me away. Yes HK has relatively clean public transport (air con is a godsend) but the destinations are filthy so in aggregate I found it dirtier than the City of London. To be fair I didn't live there so don't have your depth of experience but yeah, the London rail network impresses me.

That said if London public transport is considered an issue, then I think the other factpr is if you live in London then you are largely confined to public transport due to the difficulties getting about by private transport. In other words, if you commute to London, you arguably spend less time on London public transport than if you live in London, unless you can afford a nice home near the office. My normal route is a mainline train into London then a 4 minute tube journey. I have plenty of London colleagues who spend more time on London public transport just getting to work and that's before taking leisure into consideration. Obviously the end of my train journey is within the confines of London but it's pretty seamless because I'm just sat on the train I got on and it doesn't stop anywhere in London except the final destination, so to all intents and purposes it's not London public transport apart from when exiting the train to go to the tube platform.

 

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I think people are getting a distorted perspective at the moment due to the virus. London is one of the world’s most desirable locations, whether for residential, commercial or office space. Working from home has increased, no doubt. But the idea that a global city is going to become undesirable because a few people have got itchy feet during lockdown is ridiculous.

So you can get more space outside London. What else is new? Of course the dynamic is going to be dramatically different at the moment with restrictions and business closures, but it’s very unlikely to be forever.

There is often a reason that people choose to be in large urban centres, something to do with unparalleled opportunities and facilities in a very close proximity. People get older and have a shift in priorities, so they move out. New people take their place. The cycle continues. If it was as simple as moving 50 miles up the line to a provincial commuter town, there would be no demand for inner city areas, but there is. I’m sure there will be comparatively less demand for flats in the interim vs suburban and rural houses. These properties were worse hit in the last recession. But we’ll probably be talking in 5 years time about the latest 50 story resi tower in Canary Wharf.

London hasn't become undesirable overnight it's just that living somewhere with rapid transport links to the employment hubs is potentially becoming less relevant. I'm not arguing that people won't want to live in London any more, I'm arguing that some will want to live in areas not traditionally viewed as commuter areas.
The reason people haven't moved 50 miles up the line to a provincial commuter town to date is because they have traditionally had to be in the office 4-5 days a week plus some of those commuter towns are still quite expensive. But now they may be able to target 'normal' towns in addition to 'commuter' towns. Plus, for some people the inner city areas suit their lives better, I'm not suggestion that doesn't help an appeal above and beyond commuting time.
So consider my viewpoint as less about "OMG lets quit London everyone!" and more along the lines of "For a not insignificant number of people, a fast commute is less of an important factor compared to previous years"