Prior to the Coronavirus pandemic, home working was considered the exception to the rule, with 4.7% of the UK population working from home in 2019. This soared to 46% of people conducting some work at home by April 2020, 86% of whom were doing so as a direct result of the pandemic.
Those figures relate to a time in which many people had no choice but to stay home due to Government-imposed restrictions, but as a result, working attitudes appear to have changed for the long-term.
According to the Office for National Statistics (ONS), in Spring 2022 – when guidance to work from home because of Coronavirus was no longer in place in the UK – 38% of working adults reported having worked from home at some point over the past week. On the other hand, only 12% reported the same in an interview conducted before the pandemic.
As of February 2022, 84% of workers who had to work from home during the height of Covid-19 planned to work hybridly in the future. The most common hybrid working pattern, with 42% reporting this as their intention, was to work mostly from home. Contrastingly, the number of people planning to return to their place of work full-time was just 8%, falling from 13% in April 2021.
Alongside this change in working attitudes has been a change in living attitudes, as people have re-evaluated what they need from their homes. This is, in part, what led to the Coronavirus-induced housing boom, and likely what will contribute to continuing to keep housing demand high.
Changing living attitudes will continue to drive demand
Zoopla’s Executive Director of Research and Insight, Richard Donnell, stated they’ve “seen a strong trend between home working and the desire to move home”, with one of their consumer surveys finding 54% of respondents who expected to work from home often said they were more eager to move.
Whilst the housing market is certainly cooling after a remarkably busy couple of years, the “race for space”, which saw buyers search for larger houses in particular, continues.
These home movers are typically in the market for homes with more bedrooms, as a home office becomes a desire for many, and with garden spaces.
In response to the average price for second-stepper homes rising to a new record of £340,513 in September, Righmove’s Director of Property Science, Tim Bannister, said “these numbers suggest that for those who can, moving up the ladder to a home with more space remains a priority, even at a time when personal finances are stretched.”
Though mortgage interest rates are rising, the recent Stamp Duty Land Tax (SDLT) cuts announced in former Chancellor of the Exchequer Kwasi Kwarteng’s mini-Budget are likely to help keep demand high, with the Government claiming that “doubling the nil-rate band will enable up to 29,000 more people to move home each year.”
What’s more, experts are confident that a housing market crash is not on the horizon, with Daniel Copley, Consumer Expert at Zoopla, stating “the market is much better placed to weather the economic headwinds than it has been in the past and there are now rigorous mortgage checks in place. These checks ensure the market is better placed to endure high mortgage rates and the increased cost of living.”
The ability to work from home, scrapping the everyday commute, has also led buyers to be more open to relocating – often to outside the city. In Spring 2022, Zoopla’s research found that 44% of city dwellers wanted to move to a more rural location.
This provides opportunities for property investors
The ongoing demand for homes provides clear opportunities for experienced investors, particularly those investing via property bonds.
Demand has been outstripping supply for decades, and is currently 20% higher than the pre-pandemic five-year average according to Rightmove’s latest House Price Index.
Not only is increasing the output of new housing crucial in order to tackle the UK’s chronic shortage, but the regional, SME housebuilders typically supported by property bonds are often able to use their insight into an area to ensure they’re building the right homes in the right locations at the right time.
This means they don’t just cater to buyers either. SME builders are also able to tap into the rental market through the provision of mixed-tenure developments in locations where there is proven appetite.
When doing so, this has no knock-on effect for investors. They receive the same target returns – which are typically in excess of 7% and often IFISA-eligible – whilst the area is receiving the tenure of housing it desperately needs.
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