Six things we learned from today’s ONS house price index

Yeah, good luck with that, mate. Image: Getty.

It’s another lovely sunny day here in London – perfect weather for chilling out and drinking wine and generally not having a care in the world. So what better way is there to really rain on your parade than by talking about the bloody housing crisis yet again?

Yep. The Office for National Statistics just put out another set of data showing that – sit down, this may come as a shock – house prices have risen. Again. They climbed by 8.7 per cent in the year to June. Your wages, the odds are, didn't.

This data only covers the period to the end of June: if Britain's vote to leave the European Union on 23 June has had any impact on home values, then it almost certainly won't show up in this data.

But that caveat out the way, here's what we learned.

The average UK house price stood at £214,000 in June 2016.

Based on standard mortgage rates (10 per cent deposit, 4.5 times income multiple), you now need to be earning £42,800 a year and have £21,400 in the bank to buy that house. Easy, right? You've got that?

Oh – the price is also up £2,100 in a month, and £17,000 in a year. So if you're saving for a home, and put away less than £1,700 this year, you're actually slightly further away from your target than you were last summer.

(Obviously these figures are based on a single earner rather than a couple, and very few first time buyers buy the average house, and yada yada yada. I'm just illustrating a point here.)

The rate at which prices have risen has been accelerating.

It's not just that prices have been climbing: they've been increasing the rate at which they climb. Check out this graph:

That's not prices, that's just the rate of increase in prices. Which has itself been increasing since last autumn. Before that, it increased steadily from autumn 2012 to autumn 2014.

The dip between those two periods probably coincides with uncertainty around last year's general election. (For a while, prices increased, but did so more slowly. Great.) It wouldn't be crazy to imagine that we might see something similar post-Brexit. Watch this space.

The UK average is being distorted by England...

Scotland and Wales still look relatively affordable:

Mind you, the really striking thing here is Northern Ireland. That was one hell of a crash.

...and England is being distorted by London.

Prices in the capital are well over twice those outside the south. They're over four times those in the north east.

So house prices are higher in the south of England than in the north. Generally, much higher.

That said, it'd be a mistake to assume this means that the housing crisis isn't a national phenomenon. Remember this graph from the Resolution Foundation?

Click to expand.

Home ownership rates have fallen almost everywhere; and the single biggest fall actually came in Greater Manchester, a long way from London.

London prices make its housing crisis the most visible. But cheaper house prices aren't much help if wages are lower, too. 

But the biggest increase in prices came in the East of England.

This graph shows the percentage increase in house prices in each of the eight English regions over the last year.

Prices are up, significantly, everywhere but the north east (and even there, that increase is still three times the 0.6 per cent increase in consumer prices).

But they're up by far the most in and around London. And they're up most of all in the East of England (that's Essex, Herts, Beds, and East Anglia).

It's probably a mistake to see this phenomenon as separate from London's housing boom. Much of that region is in London's commuter zone (bits of it are even on the tube). It may be that people are paying more for homes in Hertfordshire because they've been priced out of north London or Surrey.

But London might finally have peaked.

Last chart. This one shows the local authorities where prices have increased, or fallen, by the most over the past year.

Look at the bottom half of the chart. Kensington & Chelsea, and Hammersmith & Fulham, are two plush West London boroughs, fashionable along the sort of people who use London property as safe deposit boxes. These figures are not good news for the Prime London property market, or the sort of estate agents who sell in it. Poor lambs.

These figures, as noted, pre-date Brexit. There's been a fair amount of debate as to what that will do to house prices: as with any economic shock, it might well hit the housing market.

What it probably won't do, though, is make housing more affordable in the long term. As Shelter's Pete Jefferys wrote last month, a house price crash will hit housebuilders too – and anything that makes them less likely to build is bad news.

Jonn Elledge is the editor of CityMetric. He is on Twitter, far too much, as @jonnelledge.

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To see how a city embraces remote work, just look to Helsinki

A deeply rooted culture of trust is crucial to the success of remote work. (Sean Gallup/Getty Images)

When I speak to Anssi Salminen, an account manager who lives an hour outside Helsinki, he’s working from a wooden platform on the edge of a Finnish lake. With a blanket laid out and his laptop set up, the sun low in the sky, Anssi’s remote work arrangement seems blissful. 

“I spend around half of my time working somewhere else other than the office,” he says. “I can work from home, or on the go, and I also travel to the Netherlands once a month and work from there.

“The emphasis in my work has always been that it doesn’t matter when or where I work, as long as I get things done.”

For many people around the world, the shift to remote work was sudden, sparked by the coronavirus pandemic. Finland, however, is finding the transition much less significant. Before Covid-19, the Nordic nation already displayed impressive levels of remote working, with 14.1% of its workforce reporting usually working from home. Only the Netherlands has a comparable percentage of remote workers, while the UK lagged behind at 4.7%, and the US’s remote workforce lingered at around 3.6%

Anssi works for one of many Helsinki-based companies that offers its employees flexible policies around when and where they work. That arrangement is in part due to the Finnish capital’s thriving start-up scene. In spite of being a relatively small city by global standards it is home to over 500 technology start-ups. These companies are leading the way when it comes to keeping employees connected wherever they choose to work.

“Our company has a completely location-free working policy,” says Kasper Pöyry, the CEO of Helsinki-headquartered software company Gapps. “All meetings are made available for online participants and facilitated accordingly. Some employees have worked extensively from abroad on a working holiday, whilst others prefer the comfort and social aspects of the well-stocked office. Whatever works for our employees is what works for the company.”

Like Gapps, many Helsinki-based firms are deeply preoccupied with providing the necessary technology to attract talent in a vast and sparsely populated country. Finland has only 15 inhabitants per square kilometre, and companies understand that in order to compose teams of specialised expertise, they may have to seek talent outside of the city. Local governments take a similarly proactive stance toward technological access, and Helsinki offers free, unrestricted, high-speed Wi-Fi from city-wide hotspots, while the country as a whole boasts some of the best coverage in Europe. 

But encouraging remote work isn’t just about optimising the potential of Finland’s workforce – companies in Helsinki also recognise that flexibility has clear benefits for both staff and employees. 

“The idea of a good work-life balance is ingrained in Finnish culture,” says Johannes Anttila, a consultant at organisational think tank Demos Helsinki. “It goes back to our rich history of social dialogue between labour unions and employers, but also to an interest in delineating the rules of working life and pushing towards people being able to enjoy their private life. Helsinki has been named the best city in the world for work-life balance, and I think that this underlies a lot of the mentality around remote work.” 

For Peter Seenan, the extent to which Helsinki residents value their free time and prioritise a work-life balance prompted his move to the city ten years ago. He now works for Finnair, and points to Finland’s summer cottages as an example of how important taking time to switch off is for people in the country. These rural residences, where city residents regularly uproot to enjoy the Nordic countryside, are so embedded in Finnish life that the country boasts around 1.8 million of them for its 5.5 million residents

“Flexible and remote work are very important to me because it means that I don’t feel like I’m getting stuck in a routine that I can’t control easily,” he says. “When I’m working outside of the office I’ll go down to my local sauna and go ice swimming during the working day, typically at lunchtime or mid-morning, and I’ll feel rejuvenated afterwards… In winter time especially, flexibility is important because it makes it easier to go outside during daylight hours. It’s certainly beneficial for my physical and mental health, and as a result my productivity improves.”

The relaxed attitude to working location seems to pay off – Finland is regularly named the happiest country in the world, scoring highly on measures such as how often its residents exercise and how much leisure time they enjoy. With large swathes of unspoiled countryside and a national obsession with the outdoors, sustainability is at the forefront of its inhabitants’ minds, leading to high levels of support for measures to limit commuting. In January, Finland passed a new Working Hours Act, the goal of which was to help better coordinate employee’s work and leisure time. Central to this is cementing in law that employees can independently decide how, when, and where they work.

Yet enacting the new ruling is not as simple as just sending employees home with their laptops. For Kirsimarja Blomqvist, a professor of knowledge management at LUT University, perhaps the most fundamental feature that remote work relies upon is a deeply rooted culture of trust, which Helsinki’s residents speak of with pride. The anecdotal evidence is backed up by data which suggests that Finland boasts one of the highest levels of trust and social cohesion in Europe, and equality and transparency have always been key cornerstones of political thought in the country.

“Trust is part of a national culture in Finland – it’s important and people value it highly,” she explains. “There’s good job independence, and people are valued in terms of what they do, not how many hours they work for. Organisations tend to be non-hierarchical, and there is a rich history of cooperation between trade unions, employers, and employees to set up innovative working practices and make workers feel trusted and valued. 

“It’s now important that we ensure that this trust can continue to be built over technology, when workers might have been more used to building it face-to-face.”

As companies begin to look hopefully toward a post-Covid future, the complexities of remote work are apparent. Yet amid issues of privacy, presenteeism, and social isolation, the Helsinki model demonstrates the potential benefits of a distanced working world. The adjustment to remote work, if continued after the crisis, offers a chance to improve companies’ geographical diversity and for employers to demonstrate trust in their workforce. On these issues, Blomqvist believes other cities and employers can learn a lot from Helsinki.

“People are now beginning to return to their workplaces, but even as they do they are starting to consider the crisis as a jumping point to an even more remote future,” she says. “The coronavirus pandemic has been an eye-opener, and people are now interested in learning from Finland’s good practices… We are able to see the opportunity, and the rapid transition to remote work will allow other countries to do the same.”