Authors
Our research shows that the opportunity to work outside the office for two days a week is equivalent to a substantial pay rise.
As many of us know, daily commuting takes a toll. Commuting for much more than an hour each way each day is practically impossible, especially in sectors where longer working days are more common, and often arrive unpredictably.
However, if offered – or tolerated – by your employer, working 3 days a week in the office makes a longer but less regular commute more practical. That, in turn, increases the distance you can live from London.
Although those longer commutes are more costly, the net saving from cheaper housing in the suburbs more than offsets the painful rail fare.
Example 1: Welwyn / Foxton
Consider the following station pair, both on the same line:
Welwyn Garden City is within the daily commuting catchment, with a commute to Piccadilly Circus of approximately 60 minutes:
On the same line but further out, the fastest commute from Foxton is c.1hr 15 minutes - making it more appropriate for a sporadic commuter, coming into the office ~3 days per week.
Our fictional couple has two earners, and two children of nursery age, with childcare costs running at £1,500 per month per child, buying together, and aiming for a detached house. See our full assumptions here.
If they wanted to settle near Welwyn Garden City, the average detached house would set them back £885,895 (Welwyn Hatfield Local Authority). With commuting and childcare costs included, each of them will need to earn c. £73,835 before tax to make this location work, with a reasonable amount of disposable income left for discretionary spending.
However, if they can negotiate 2 days from home a week with their employer, then commuting from Foxton becomes more practical, driving to the station in Royston for c.15 minutes to get the fast train. Under the same assumptions, the average detached house will set them back £591,871 (South Cambridgeshire Local Authority) – almost £300,000 less. On a per-person, pre-tax basis, the required salary drops to c. £62,455 each.
Indeed, looked at it the other way, if we held the salary required to finance the average detached house in Welwyn Garden City constant, but moved the family to Foxton, the household could have c. £1,100 pounds more disposable income left at the end of the month.
Example 2: Woking / Basingstoke
Woking is also within the daily commuting catchment, with a commute to Piccadilly Circus of approximately 50 – 60 minutes:
Under the same assumptions (2 earners, 2 children of nursery age, buying a detached house) will require a gross income of c.£ 78,095 each to finance the purchase of the average detached house in the local authority (£954,812).
Meanwhile, if our example family could move further out to Basingstoke, their commute would increase to 75-minutes each way to Piccadilly Circus (but only 3 days a week):
They would then need c. £61,677 each to finance the purchase of the average detached house (£591,619) - saving them c. £1,600 post-tax each month if they held their previous Woking salary constant.
Quantifying the Potential Savings from Hybrid Work
Extrapolating this trend out, we present below the results from selected station-pairs on the same line – with the first inside our “Daily Commuting” catchment area, and the second – the hybrid work alternative – in the “Sporadic Commuting” belt:
Conclusion
Whilst it's not strictly like-for-like to create an exchange rate between commuting time and salary, we think many would take this trade. With cash pay rises harder to come by in a moribund UK economy, negotiating a better work-office balance might be the next best strategy for workers looking to boost their household bottom line. This is even more the case given the notorious "tax trap" that exists for incomes between £100,000 and £125,000, where the removal of the personal allowance results in a marginal income tax rate of 60%.
The Coronavirus pandemic took hybrid working mainstream, significantly reducing the stigma that had previously persisted around working from home. We would therefore expect to see reduced relative demand for property in London, shifting it outside the traditional commuter belt, as sporadic commuting has become more widespread. This is roughly what we have seen: London detached house prices have grown slower than all other regions since January of 2020:
Detached House Price Index by Region (Jan 2020 = 100)
Source: Schroders, ONSi
Perhaps we will see this unwind over the coming years, but there is little evidence yet of that trend emerging in London, which ranked second to last amongst global peers for days worked in the office in 2024 in a study commissioned by the Centre for Citiesii :
Average days in the office per week & change since Covid, full time city centre workers
Source: FocalData / Centre for Cities, 2023 & 2024; Savanta / Centre for Cities, 2024.
• Notes: 2024 averages for all full-time workers surveyed. Pre-Covid averages are assessed on working patterns in January 2020. Pre-Covid data for London is taken from Centre for Cities’ 2023 survey. For other cities, it is assessed on all workers who were full time in January 2020, from the 2024 survey. Singapore’s January 2020 average days in the office are anomalous.
And journeys have yet to return to their pre-pandemic rate on the Transport for London network, having stabilised since 2023 at a lower level:
Journeys on the Transport for London Network (2014 – 2024)
Source: London Datastoreiii
On balance, it looks like the sporadic commute is here to stay - with all the ramifications that implies for the geographical distribution of housing wealth in the UK.
ii: https://www.centreforcities.org/publication/return-to-the-office/
iii: https://data.london.gov.uk/dataset/public-transport-journeys-type-transport
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