A key speaker at a government-sponsored conference has predicted that the era of regular annual house price increases is now at an end. David Miles, from the government’s Office for Budget Responsibility said: “Those forces driving house prices up are going to be much weaker, I suspect, in the next 40 years than they have been in the past 40 years. If anything, this unusual age of massive rises of house prices may be nearing an end.”
The comments by Professor Miles at the Economic Statistics Centre of Excellence conference formed part of a speech under the heading: House prices: the power of interest rates, demographics and work from home. Along with slower population growth and changes in borrowing costs Professor Miles highlighted a third factor influencing house prices which had not been seen before the Covid pandemic – the much greater possibility for many people to work from home (WFH).
In their discussion paper entitled More Working from Home, Professor Miles and his colleague at Imperial College, Professor James Sefton, suggest that: “Land and house prices decline after a sudden rise in work from home opportunities and across large swathes of the areas where people lived before the change; prices fall by substantial amounts and not just near the centre of cities.” Working from home could become a permanent factor in driving our living and working practices, Professor Miles argues, since many workers will no longer need to live within regular commuting distance of what was previously their place of work. Working from home means that people could in future live in a cheaper location outside the commuter belt, thereby reducing pressure on the available property in commuter towns and forcing down house prices as demand falls.
Many of those who currently work from home are keen to make this a permanent feature of their employment. In fact, a third of workers say they would switch jobs if their employer tried to remove their option to WFH. However, a significant number of major employers are moving away from WFH for many of their staff, with employment sector experts Beamery claiming in February that 58% of workers had returned to the office full time. In April, global financial services company JP Morgan Chase announced that their staff should return to the office full-time since “they must meet with clients, they need to teach and advise, and they should always be accessible for immediate feedback and impromptu meetings.” Many workers are in fact glad to return to the office, saying they miss the social interaction and creative atmosphere, as well as the ease of problem-solving with face to face conversations.
A couple of years on from the worst of the Covid pandemic, which ushered in the first WFH initiatives, it is impossible to say what effect WFH will have on house prices in the future. Housing industry experts cannot even agree on how the market is faring today. Banking group Halifax claimed property prices fell in May after three consecutive months of growth, yet rival Nationwide said that prices rose in April after seven months of decline. Halifax recently reported that we “should expect some further downward pressure on house prices over the course of this year”, whilst Nationwide claimed that figures suggested “tentative signs of a recovery”.
The UK housing market continues to confound even the experts. Predictions that prices would fall after the Brexit vote, and then again in the wake of the Covid pandemic proved to be wrong, in this area at least. Who knows if the hike in borrowing costs and higher inflation will have any more lasting effect on house prices?
Bretherton Law have been serving the people of Hertfordshire for over 50 years. Our team of experienced Property Lawyers will ensure that whether you are buying or selling, the conveyancing process will run smoothly and professionally. We offer a same day response promise as well as fixed fee quotes. Bretherton Law are accredited under the Lexcel legal practice and the Law Society’s Conveyancing Quality Schemes. Contact us on 01727 869293 or use the contact form on this page.
