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BRITONS AREOWPPKPMGYour browser does not support the element. back in the office—and not just because a new year has begun. Five years after the start of the pandemic, ever more employers are demanding that their staff come in three, four or even five days a week, forcing many to abandon home offices eagerly acquired, furnished and decorated during lockdown. That turn in the trend is showing in Britain’s housing market. Properties, often large ones outside London, bought and built in the hope that covid had consigned commuting to the past, no longer look so desirable.The switch back from working at home has gathered pace. According to the Virgin Media 2 Business Movers Index, which tracks commuting behaviour in Britain, the number of companies requiring employees to turn up three or more days a week rose to 75% in 2024, from 67% the year before. Bosses at half the firms it surveys have ordered staff back for at least four days, up from 46%. Nearly one in three companies insist that employees are in the office for a full five days.On January 7th , an advertising giant, became the latest to tighten its policy. From April it will require its workers to be in the office four days a week. Nearly two-fifths of British workers now commute five days a week; 83% of business leaders polled by , an auditor, say they expect a full return to the office by 2027.All this is undermining the home-buying habits formed during lockdown. So far, house prices overall have remained resilient, even though interest rates are no longer at rock-bottom. They rose by 3.3% in 2024, according to Halifax, a big mortgage lender. But cracks are appearing in the prices of homes that were sought after for their large gardens or extra rooms when covid was at its height.In 2024 detached properties, the prices of which rocketed during the pandemic, recorded the weakest price growth of any category for the second year running—behind flats, semi-detached and terraced houses, according to Nationwide, another leading lender. They are also proving harder to sell. Detached houses take 73 days to find a buyer, twice as long as they did in 2022 and longer than other homes, says Rightmove, a property website.Even at the top end of the market, prices are adjusting to this new reality. Outside London, prices of “prime” properties, valued at £1m ($1.2m) or more, have fallen by nearly 7% from their peak in September 2022, says Lucian Cook, head of residential research at Savills, an estate agent.Higher mortgage costs explain some of this. But dwindling demand in areas that Londoners flocked to during lockdowns, sending prime-property prices up by 17% between 2020 and 2023, suggests a structural shift. Prime-property prices in coastal regions, which performed strongly during the pandemic, declined by more than 5% last year, for instance. It marks the end of both the race for space and the dash to the countryside, says Mr Cook.Markets closer to London appear to be heading the other way—perhaps reflecting a renewed need to be within commuting distance. The capital’s prime markets, which lagged behind those in the rest of the country during covid, are returning to modest growth: prices rose by 1.4% in 2024, according to Savills.As preferences and prices change, so do developers’ priorities. Many housebuilders shifted away from flats towards detached homes after the global financial crisis to appeal to cash-rich buyers (see chart). In 2008 detached properties made up 15% of new housing stock, according to the National House Building Council.A government-backed help-to-buy scheme, initiated by the Conservative-Liberal Democrat coalition in 2013, helped first-time buyers purchase larger homes by lending them part of a property’s value. By 2019 detached houses’ share had reached nearly 30%. The pandemic reinforced the trend. By 2022 the desire for more space had boosted the share of detached homes in new housing to more than 35%.Developers are adjusting their inventory once again. Last year the number of new detached homes was down by more than half from its peak in 2022—a larger decline than for flats, terraced houses or semi-detached homes. The return to the office and the end of cheap debt are pointing the same way: no longer able to afford the houses they want, Britons are settling for the ones they need.
