08 Jun CLAIMS that the work from home revolution will lead to a house price crash are misguided
CLAIMS that the work from home revolution will lead to a house price crash are misguided, an expert has warned.
The Office for Budget Responsibility (OBR) last week said WFH may permanently depress house prices by 10pc.
David Miles, one of the three members of the OBR’s executive team, said he expected working from home to create a “permanent change” to prices.
But Jonathan Rolande, from the National Association of Property Buyers, has questioned this prediction.
He said: “I find it difficult to believe that WFH will create a drop in prices similar to those we saw in the great financial crash of 2008
“WFH is something that may well be enshrined in law soon but people are drifting back to work, encouraged by employers as well as the social and productivity benefits of working as part of a team so the take-up is likely to be less than envisaged.
What’s more, those that do stay at home will want more space and a nicer working environment and saved costs on travel, clothing and take-out coffees will boost disposable income allowing them to spend a greater proportion of their wage on housing.”
Mr Rolande added: “Prime central locations may well see a knock-on effect on footfall but this is more likely to affect those at the sharp-end, fewer coffees sold will result in fewer baristas, but they rarely live in the city centre itself, it’s just too expensive. Therefore the effects will be diluted, especially when some slack is taken up by those investing in short-term and holiday lets.
“Make no mistake, the market is in a precarious position, but WFH will not be the catalyst that makes prices fall, there are far bigger reasons that may make that happen.
Mr Miles said he expected WFH to dampen house price growth within the next three or four years.
Citing his academic research, Mr Miles said he expected the price of homes in rural areas to rise, but said, as they tend to be cheaper on average, any increase in value would not be enough to compensate for the effect of a slump in cities on national prices.
He said the amount people can spend will also be significantly limited by rising interest rates, in contrast to previous years.
During the pandemic, many moving to the countryside upgraded to pricier homes while rates were very low and a stamp duty holiday was in place.
Mr Miles, who is also a professor at Imperial College London, recently said the “age of massive rises of house prices may be nearing an end” because of higher interest rates, slowing population growth and working from home
