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Urban flight from Manhattan to the outskirts of New York City in the wake of COVID-19 has been big news. COVID-19 related restrictions and the sharp acceleration of remote working have created a desire for more space at home, altering perceptions of the benefits of living close to city centres. But, looking beyond the example of New York City, how widespread is this shift in preferences about where to live? To answer this question, we look at detailed house price data from 13 OECD countries. Relative decreases in house prices would indicate areas that people have been leaving, and relative price increases the places to which people have been moving.
We find that the premium for homes in urban centres has decreased in most cities with more than 1.5 million inhabitants; the maps below illustrate this for Budapest and Lisbon. Housing transactions show a similar picture: in most large cities, the rate of transactions has dropped in urban cores while rising in the suburbs.
However, this outward shift in housing demand has been limited to large cities, and we do not find signs of it in mid-sized and small cities.
Figure 1. House prices have risen more in the peripheries than in the centres of large cities
Changes in prices per square meter, 2019H1 to 2021H1
Note: Black crosshair symbol marks population-weighted centre.
We can also provide some insights into where this desire for more space is most pressing.The shift from urban cores to their peripheries has been stronger where:
- wide gaps separated house prices in city centres and commuting zones pre-COVID-19;
- peripheral areas provide substantially better access to green spaces than the urban core;
- good high-speed internet coverage extends to the periphery;
- populations and population densities are larger;
- and COVID-19 containment measures were more stringent.
Is this a short-term reaction to the pandemic, or part of a longer-term future? Will remote working make city centres permanently less attractive? And, if so, when individual citizens are finding a new lease of life in the suburbs, will this benefit society more broadly? And what will that mean for how we manage our cities?
It is clear there may be benefits. In the largest cities, urban centres were becoming increasingly congested, unaffordable, unequal places. The move to the suburbs could help address some of these challenges. However, when many people move away from city centers to areas with lower population density this can also be problematic. For example, efficiently providing public transport requires a certain minimum population density. Land use frameworks that allow housing supply to adapt to the described changes in housing demand through gentle densification of newly popular areas rather than urban sprawl would help to mitigate the potential drawbacks of low public transport ridership and increased traffic congestion.
Remote working could also help to catalyse and rejuvenate rural areas that have been struggling with both population decline and subdued economic growth. However, the rural or semi-rural areas close to larger cities have generally been doing well on both these fronts, so they are not really the places in most need of a boost. And while the issue of whether or which remote rural regions will be able to benefit from remote working is unclear, initiatives to help them do so, such as improving internet access and enhancing service provision, will be beneficial and help close the growing gap between them and leading regions.