Remote work lifestyle to ‘drop house prices by 10pc’ for good

WORKING from home will permanently depress house prices by 10 per cent, a leading economist at the Office for Budget Responsibility (OBR) has said.

David Miles, one of the three members of the OBR’s executive team, said he expected working from home to be a “permanent change” that would dampen house price growth within the next three or four years.

He predicted that people would move farther away from city centres, lowering demand for expensive properties in these areas and causing a “net reduction in the average level of prices across the country”.

Citing his academic research, Mr Miles said he expected the price of homes in rural areas to rise but, 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 spend would also be significantly limited by rising interest rates, in contrast to previous years.

Mr Miles, 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.

He said: “There’s much greater ability for people to work quite effectively from home.” Modelling he has developed shows that “within three or four years the level of house prices [will be] 10 per cent lower than it would have been [without home working], and stay at that more affordable level”.

Forecasts from the OBR do not take into account the impact of working from home, which would worsen the outlook for prices. In its latest assessment in March, the OBR said house prices would fall by 10 per cent from their peak in the fourth quarter of 2022 before rebounding in the second quarter of 2024.