Higher mortgage rates mean that home moves out of London are being driven by need rather than want, with people looking for smaller properties in more affordable areas, according to an estate agent.
Londoners accounted for 7.7% of home buyers outside the capital in Britain during the first half of this year, outpacing the 2015-2019 average of 6.9%, according to estimates from Hamptons.
However, this figure is slightly below the 7.9% recorded in both 2021 and 2022 – a time when people were adjusting to new lifestyles such as working from home more often.
The calculations were based on analysis of data from estate agents network Countrywide, which Hamptons is part of.
Affordability pressures have meant that the average “London leaver” spent £429,800 on their new home this year, £63,735 less than those who left the city in 2022.
There are also signs that a higher proportion of London leavers are buying smaller properties, with 37% purchasing a one or two-bed home, up from a third (33%) last year.
This year London outmigration has increasingly been driven by need over want as higher mortgage rates reduce buyers' budgets, pushing them in search of smaller homes in more affordable areas— Aneisha Beveridge, Hamptons
Hamptons estimates that three in 10 (30%) Londoners buying property outside the capital this year are first-time buyers, up from 27% last year.
The average first-time buyer leaving London travelled 25.0 miles from where they were living, up from 23.0 miles last year and 14.3 miles in 2013.
Aneisha Beveridge, head of research at Hamptons, said: “Higher mortgage rates have paused the unwinding of arguably the biggest Covid-induced trend in the housing market – London outmigration.
“Rather, this year London outmigration has increasingly been driven by need over want as higher mortgage rates reduce buyers’ budgets, pushing them in search of smaller homes in more affordable areas.
Trading the city for a cheaper area outside the M25 might be the only option for those needing to upsize— Aneisha Beveridge, Hamptons
“Most of these movers still look to retain strong links with the capital. This has supported values of smaller homes in some of the more affordable towns within an hour’s commute of London.
“Looking ahead, the likelihood that mortgage rates will stay higher for longer may keep the pace of London outmigration up.
“We’re also reaching the point where a large number of households who bought a home at the peak of the London market between 2014-2016 might be looking to move over the next few years.
“And with property prices in parts of the capital lower today than when they bought, trading the city for a cheaper area outside the M25 might be the only option for those needing to upsize.”
