Property priorities are changing as agile working becomes the norm. Connectivity and commutability now rank high on the High Net Worth (HNW) homeowner’s wish list and are quietly reshaping the top of the market.
Has city life had its day? The start of 2018 saw jitters in the capital, with figures from Your Move revealing that London house prices in 2017 were falling at their fastest rate since the start of the recession.
According to Nationwide’s House Price Index, London was the weakest performing region when it came to house price growth last year, falling 0.5 percentage points. Fighting it out for the 2017 top growth spots are areas such as Cheltenham, Bournemouth and Brighton – all known as much for their quality of life as for their transport links.
It would be easy to blame London’s fall from grace on former stratospheric valuations, but the truth is that the London exodus is not just about affordability, it’s also about quality of life – especially at the top end of the market.
The new commute
Property experts say prospective homeowners are changing their requirements due to the increasing take-up and frequency of home working. “This can have a significant impact on the home search, as [prospective home buyers] don’t necessarily need to be within such close proximity to a train station with a fast service into London,” says Charlie Wells, managing director of buying agency Prime Purchase.
“Even a commute of two hours-plus from London is okay for those working from home for the majority of the week. Some far-flung areas have faster broadband speed than those an hour and a half out of town. One of the first things people ask us when buying a house is, ‘How fast is the broadband?’ People want the ability to livestream for video conferencing.”
Investec Private Bank Business Development Manager Peter Izard agrees: “We’re seeing more clients embrace the technology opportunity – with less disruption, you can get a lot more done working from home.”
Investec itself has been piloting a flexible working project for the past year. “We embraced agile working, empowering our staff with laptops so that they could work remotely, and the pilot has been extremely successful,” Izard says. “On a personal level, as long as there is power and reliable broadband, I can be as effective working from home as I am in the office, and I’ve saved on the four-hour door-to-door commute.”
The beauty of balance
Even so, Izard guards against a complete move to home working – it’s all about balance, something that HNW individuals are very good at. “It’s about embracing technology and having the best of both worlds,” he notes.
“High net worth individuals really understand the value of time. They know that there are only 24 hours in a day, and they get the balance of time, effort and reward just right. They know that time working from home brings double the productivity in less than the travelling time, and so pays three times the dividend. They set their city days aside for meetings. The trick is to strike a balance between working at home and having face-to-face meetings – and HNW individuals never underestimate the power of face to face.”
A recent update of research from the London School of Economics shows that having a good broadband speed can already increase the price of a home, while being in an area where Amazon offers evening deliveries or where Uber services are available will also command a higher price than an equivalent property where these services are not offered.
Dr Gabriel Ahlfeldt, Associate Professor of Urban Economics and Land Development at the London School of Economics and Political Science, says that it is possible to pinpoint areas that will be popular with the demographic embracing a new way of working.
“It is likely that houses in low-density areas with access to natural amenities and very good broadband will command high broadband-related premia, paid by people who are able to telecommute,” he says.
Moving out – the new hotspots
Izard concurs, but adds that commutability to London is still a key factor for HNW individuals. “Brighton is still popular,” he says, adding that Bath and Bristol are close contenders due to the continuing improvement of rail connections. He also highlights Cambridge and its surrounding villages as desirable, especially given the launch of the new Thameslink route (Brighton to Cambridge direct).
Oxford and the Shires are constantly popular due to their great schools. “Most of our clients are wealth creators and have youngish families, so access to good schooling is a massive consideration,” Izard says. Other hotspots to keep an eye on are towns and villages along the new Crossrail link. “Crossrail will continue to have a very positive effect on house prices, and, once it’s operational, people will see the benefits. Slough has already seen massive price rises.”
Never tired of London
So what does the future hold for London? Will the exodus continue as flexible working becomes the norm? Izard thinks not.
“London is perennially desirable for HNW individuals: it’s a status symbol and it’s still where your peers are. Prime central London has taken a hit, but I think that was down to Brexit and stamp duty changes – predominantly the latter. However, that seems to have stabilised as stamp duty has been factored in to the cost of purchasing, both by buyers and sellers.
“I don’t see that Brexit is causing people to delay purchases. London will maintain its status as a financial services capital, for the reasons we already know: education is still market leading, it straddles both Eastern and Western time zones, English is still the international language of business, and, above all else, we have good legal title here. So when you buy in the UK, you’ve got the strength of knowing your asset is 100 percent safe. These are fundamental reasons that won’t change post-Brexit.”
Prime Purchase’s Wells agrees: “While home working is pushing people further out, it won’t affect house prices in the capital, as there is still such demand to live there and house building is not keeping pace with that demand.”
Rosie Murray-West is a personal finance, news and features journalist based in London.