After living in Brixton for almost a decade, Rohan and Naomi are finally making their great escape from the capital. “Now that we’re working from home, why wouldn’t we buy a house outside of London?”, says Rohan Lintern, a 33-year-old software engineer and father of two. “We get more space, and a garden, for the same price.”
The couple are not alone in this. They are joining a wave of Londoners moving out of the big smoke. With the remote working revolution relegating the morning commute to distant memory (or nightmare) status, more and more home buyers are looking to live outside major cities. But the data so far indicates that London and the greater South East will gain and lose the most from this trend. This is a reflection of regional economic inequalities made worse by the pandemic – and which Boris Johnson has long pledged to redress under his much-trumpeted “levelling up” agenda.
Coronavirus is changing the rules of the game, says David Fell, senior analyst at Hamptons International, an estate agent. “Since the housing market has reopened, the number of homes bought by London tenants outside the capital is up 42 per cent on the same time last year. One in three London based renters looking to get on the ladder now chose to buy outside of London – a record high.”
Real estate provider Savills echoes this. In June, property outside of London saw the highest number of accepted offers in two decades. There has also been unprecedented interest for homes outside London from the capital’s first-time buyers, Hamptons reports.
Share of London-based applicants registering to buy outside of London who were first-time buyers
Source: Hamptons International
For years, more Brits over the age of thirty have left London than entered it, fleeing the city to settle down in its satellite towns or commuter belt. The pandemic seems to be accelerating this trend, for now, says Andrew Carter chief executive of the Centre for Cities.
Although the prospect of working from home means some people may choose to move further to get more for their money, most London leavers still want to stay south, explains Aneisha Beveridge, head of research at Hamptons.
Indeed, the South East and East of England are getting the most attention from London buyers by an overwhelming majority, shows Hamptons’ data. Broxbourne in Hertfordshire – where homes are on average £135k cheaper than in London – has seen the most interest.
While house hunting in the South has shot up, the number of Londoners buying houses in the Midlands and the North noticeably decreased in May, compared to previous years.
Where London-based buyers are going
Source: Hamptons International
Several factors may explain this. That month, lockdown made it hard for people in London to view houses further away from the capital, while also decreasing the number of job relocations to the Midlands and North, according to Hamptons International.
“Moreover, migration to the Midlands & the North is [usually] driven by affordability pressures. But [since Covid-19], people are being driven more by lifestyle,” says Beveridge. However, these priorities may switch as the global and UK recession bites harder in coming months and year, thereby pushing up Londoners’ demand for property north of the capital.
The picture is very different outside of London and greater South East. Most cities are not seeing a significant increase in residents prospecting homes in their surrounding region.
For example, the share of Manchester applicants registering to buy in neighbouring Cheshire East & Cheshire West rose from 12 per cent in May, June and July of last year to just 13 per cent during the same period this year, shows Hamptons. Meanwhile, the share of Birmingham-based buyers looking to purchase in Worcester only rose from 1.1 per cent last year to 3.2 per cent.
These differences highlight and reinforce the UK’s regional economic inequalities by sectors, classes and income groups. Indeed, not all professionals and locations have been equally affected by the move to home-working. Almost half of London’s professionals say they can work from home, while just under a third in Wales and the North East can do so, according to a recent YouGov poll.
Share of London-based tenants who leave the capital when buying a home
Source: Hamptons International
[See more: The home-working revolution: new normal, old divides?]
This reflects the extent to which London is, by far, the UK’s hub for white collar work. Across IT & telecoms, financial services, and media, marketing & advertising, 75 per cent of professionals say they can do their job from home – on average – compared to only 32 per cent in manufacturing, construction and retail, according to a recent YouGov poll.
“I have the privilege of working from home. This isn’t a great ‘leveling up’ opportunity for all as some claim. You might get a bit of distribution within the greater southeast, but that’s about the extent of it,” says Andrew Carter. “Instead, we need to be focusing how to get people the education and skills that will make them competitive in the 21st century labor market.”
The UK capital is by no means immune from economic inequalities. The city has some of the highest poverty rates in the UK, and with so many office-workers operating from home, central London’s retail and hospitality industries are bereft of business. Meanwhile, the rising number of tenants looking beyond London is providing a boon to cheaper commuter belt towns, but it is a headache for the capital’s landlords, says Fell.
Share of buyers registering in branches outside of London who are currently based in London
Source: Hamptons International
For some this will save costs. Companies may soon downsize their offices, while those renting a home or apartment are already seeing falling prices. The latter might encourage more young professionals – mostly those in their twenties – to move to London, not least since they are at less risk from coronavirus.
While most peoples’ experience of home-working has been positive, it seems that many would like the option of returning to some office work. A recent survey from Global Workplace Analytics and iOmetrics found that 76 per cent of respondents want to continue working from home at least one day a week. Only 16 per cent do not want to return to the office at all.
[See more: Frances O’Grady: “You can’t put the demand for flexibility back in its box”]
However, Tim Leaver, an employment lawyer at Herbert Smith Freehills, thinks that a more flexible approach to working from home seems inevitable and that employees may gain the legal right to work from home. “People may still want to live within relatively easy reach of the office, and so commuter towns are likely to remain popular places to work, but the concept of what might count as being ‘commutable’, where it may only be for a journey once or twice a week, may change,” he adds.
It remains to be seen how the ongoing wave of migration to the commuter-belt (and beyond) will impact pay, and vice versa. Facebook’s idea of salary-by-location policy, in which employees’ pay is based on local cost of living, may set a precedent. For now London’s real estate trends are a stark reminder of the UK’s economic disparities. More flexible working could help “level up” the economy, but making this a matter of equal opportunity is a major challenge.
Sebastian Shehadi is political editor at Investment Monitor from the New Statesman Media Group.
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