The introduction of the concept of remote work during the 2020 lockdown really shook things up. Employees and employers are still arguing over whether you should be in the office or not, what constitutes employee rights, and a lot of talk about “work/life balance”. What isn’t mentioned as much is the introduction of remote work’s effect on the housing market. After all, these employees need to go somewhere, so what is happening at home? We are taking a look at how remote work has affected the housing market.
A Shift in Housing Demand
One instant change that we saw from employees was that they no longer had to be close to home. The idea of a digital nomad swept the headlines with people reporting to Zoom into meetings from their beach-side café in the Bahamas. That was quickly nipped in the bud with the introduction of hybrid working as a standard, but that in itself has allowed employees to live farther from their workplace. Without the need to commute every day, there has been an increase in demand for suburban and rural properties, because doing that long, stressful commute once a day is a lot more appealing than doing even a short commute every day.
In turn, interestingly, this has led to a growth in “second cities”. Smaller cities with lower cost of living and better quality of life are starting to thrive as they become more attractive to people who no longer have to live in their nearest major city for work.
However, this means that the demand for housing in these secondary cities is growing, pushing house prices up.
The Impact on Urban Real Estate
It might not feel like it, but this migration out of cities has brought urban rental prices down. For example, the London Assembly Housing Committee published a report in 2021 that showed that there was a significant drop in rental demand as people migrated out of the city, leading to lower rents and higher vacancy rates. Make of that what you will.
This has led to a reimagining of urban spaces due to less of a demand for office spaces. We came up with hot desking, and we found other companies sharing our office space, but you might have also noticed over the past four years, city councils and property big wigs rethinking uses for land. For instance, in Glasgow there’s been talk of a former music venue, SWG3 being transformed into a 13-storey hotel, and a former tax office turned into a 36-storey student apartment block.
The changes in commercial properties
While we’re on the topic, we should give an honourable mention to commercial property. The shift out of offices means that a lot of companies are faced with empty space. There has been an increase in vacancies, leading to businesses downsizing their office spaces or even moving out entirely. Some commercial buildings have started repurposing or adapting their office spaces for other purposes, such as residential units, mixed-use developments and more.
In Glasgow City Centre, if you’ve ever gone for a beauty appointment or a yoga class, you might find yourself walking through a corporate building that’s hosting all kinds of businesses, office work and high street alike. The high street isn’t dead, it just went upstairs.
Changes in Homebuyer Preferences
As you might imagine, once people started working from home, they soon realised that home wasn’t fit for that purpose. We saw an obvious rise in spare rooms getting converted into office spaces, since sitting at the dining table, in a stationary dining chair for long hours, was leading to back problems. A desk in the corner of the living room led to getting disturbed by the rest of the family, and wi-fi not quite reaching the spare bedroom was no longer acceptable.
As a result, homes with extra rooms have become highly desirable, and homes with strong internet connectivity is priority when house hunting as much as council tax bracket or energy usage.
The Economic and Social Implications
Naturally, this mass migration of working people out of cities into more suburban and rural areas is altering the social fabric of smaller communities. This could be a good and bad thing. Notoriously, rural communities have an ageing population, where retirees go to live a life of peace and families raise their kids. Only one party in that scenario is working, causing a stagnant economy and a real problem looking for workers. However, on the other hand, demand for homes will raise prices, leading to tensions amongst changing demographics.
Conclusion
Ultimately, no one knows what the future might bring. From looking at our past blogs, we believe that remote working is here to stay, however, we can’t see the future. It’s something you now have to consider when buying property, be that private or commercial.
