The issue for the employer is productivity; will their organisation will be as productive with everyone working from home and if it drops can they restructure/invest/train to get it back to where it was. While rent and rates etc are high they probably don't outweigh a well structured business model.
I completely agree that it's not sustainable for a couple in a one-bed apartment and if small children are in the mix it's a disaster.
I agree fully. However I don't think the employee will offer WFH if they believe there will be a loss of productivity. Neither will they permit a person working from home to be 10% less productive. In my organisation management believe productivity is the same as pre covid with us all wfh however staff are flagging issues that to maintain stability it has required extra effort. We are also flagging issues about cross team contact etc which will lead to less measurable but long term issues for the business and staff.