New work patterns and housing location choices

Distance and commuting costs are well established as key determinants of location choice for a place of work and a place of residence. Technological changes in recent decades have greatly affected these factors. Triggered by the COVID-19 pandemic, there is now widespread adoption of various forms of flexible working, work-from-home (WFH), and hybrid working, and those are expected to continue to shape working patterns. As workers are increasingly able to choose residence locations farther away from the place they work, it raises a significant question: how are urban markets affected by the introduction of new ways of working? In this study, a spatial equilibrium model is employed with data from all regions of England to analyse changes in the distribution of population and income and their impacts on real estate markets, considering household heterogeneity and local amenity diversity. We also analyse the implications of this new sorting and look at the possibility of the inequality gap widening due to varying levels of access to new work patterns. This research has substantial implications for policymaking and investment decisions.