You have probably heard the phrase ‘before Covid‘ a little to often now, haven’t you? Before 2019, the approximate percentage of people working from home partially or fully was at 12%. However, due to the pandemic, Covid-19 outbreak, there was a dire need for people to switch from going to their workplace to working from home. According to findings from Eurofound, the number grew to about 50% of Europeans as of 2020, and most companies and organizations adopted this measure to curb the spread of the virus.
This move made working from home more convenient both to the employer and the employees as both sides noticed numerous advantages to working remotely. Hence, working from home (WFH) became the new normal for many, and others continued to do so even after the pandemic. Working from home has proven to be an attractive prospect for the employees as they can now cut on commuting costs, flexibly care for the children, and work in a stress-free environment thanks to improved work-life balance. Imagine living in a world where you can work in your pajamas and at your own terms! For employers, happy employees equate to a boost in productivity. In addition, this step helps the employers to get reduced overhead costs, longer business days, and access a larger talent pool.
The worldwide embrace of working from home has proven to have a subsequent effect on Real Estate, especially the residential sector. Working from home means you do not have to go to your workplace, and thus living close to your workplace is no longer a priority. This has seen several people move back to the city’s outskirts, especially for the younger employees who had financial issues and were living in South East, which is quite expensive. In addition, more people are now looking for wider residential spaces that can incorporate home offices for comfortable and productive working remotely experiences.
Over the past decade, rental and social housing have progressively become less affordable in many European states. In a recent study of the economically advanced European countries by the International Monetary Fund, a traditional renter/landlord household used approximately 25% of its income on rent in 2018. A young family spent almost a third of their earnings on the same. For a household in the lowest percentage of the income distribution, the amount required to pay for the same was more, at about 40%, despite the country’s growing economy. This shows that poorer households have not been able to benefit from this constantly changing economy.
The working from home tendency and the demand for such spaces is expected to deteriorate the affordability of rental housing and inequality trends that were already existent before the pandemic hit Europe, warranting more people to work remotely. However, it is worth noting that the populations of people working from home also vary in different locations, meaning the costs will also be different. For instance, as of 2020, fewer than 14% of people in Middleborough worked remotely, while an average of more than 70% in Richmond upon Thames did the same.
Due to these factors that have caused most home buyers to reassess their preferences and additional change in taxes, the average house price has accelerated growth. All UK nations had high price growth in the year to September, according to the Office for National Statistics (ONS), with the following average prices/percentage increases:
- England – £288,000 / 11.5%
• Wales – £196,000 / 15.4%
• Scotland – £180,000 / 12.3%
• Northern Ireland – £159,000 / 10.7%.
Moreover, there is a peril that more profound divisions are strengthened by a move that turns millions more of these rental spaces into workspaces. These have already been made more expensive beyond the reach of people living in privately owned areas. Because people work in their homes and live in them, a policy that reinforces the importance of property ownership could easily benefit owner-occupiers and landlords at the expense of the UK’s estimated 13 million private renters. The latter is already at a disadvantage due to their lack of assets and housing security.
Predictions based on the current trends suggest that if the WFH is continuously adopted and affected, houses with such preferences as home offices and generally wider spaces since you spend most of the day at home will increase in price. However, this trend will also see a high percentage of people relocate to more convenient spaces, especially based on affordability. The government may have to come up with measures and policies to ensure the move cushions the less fortunate.