How we work is changing and it's going to impact house prices
London is special. Over 14 million people live there. That’s 10 million more than Birmingham, the UK’s second largest city.
London is also theUK’s most expensive housing market. That’s because it’s the biggest employer. London generates 22% of the UK GDP and hosts 841,000 businesses, more than any other city, county or country in the UK.
But how we work is changing. The gig economy is booming and professional service workers are quitting traditional 9–5 jobs to freelance and start their own businesses. People want more creative and commercial control over their lives. Blame Instagram.
Many people are working from home to spend more time with families and less money on commuting. It makes so much sense. But this has implications for housing that nobody seems to be talking about.
85% of London’s employed population works in service industries. That’s 3.2 million people. As they embrace new ways of working, expect them to lose their close affiliation with London.
As a result, housing in provinces will richen up versus London. We’re talking long term here. After all, the current macro outlook is uncertain and it seems likely UK house prices will fall across the board due to the fallout from Brexit.
In the long run, remote working and the gig economy will change the long established relationship between house prices in London and the rest of the UK. Expect to see prices in London cheapen relative to the commuter belt outside the capital, as more people seek a “weekly commuter” lifestyle with infrequent travel to London.
The traditional commuter belt has always been popular, and therefore expensive. But this radius will expand dramatically. If people only need to commute once or twice per week, they will be much more willing to handle commutes over one hour.
This bodes well for towns and villages within a two hour train ride (150 mile radius) of London, with direct trains to the capital. Expect this to sweet spot for residential property going forward.
The trend towards remote working is well established and will only accelerate as companies look to digitise their offerings, slash operational costs and compete for talent with more flexible working practices.
As the UK economy becomes more diversified and digitised, house prices across the country will converge. They may never reach parity, but they will move closer. It will take decades, not years.
What about other counties and continents? Remote working will have a big impact on global economy. It has the potential to restructure entire national and regional economies and distribute wealth more effectively. Let’s see.