In the first half of 2024, Londoners purchased 33,130 homes outside the capital, slightly below the 2015-2019 pre-pandemic average of 34,830. This fall is predominantly due to fewer people moving home nationally. Based on current trends, this will likely mean around 76,000 homes will be bought outside the capital by Londoners this year, down from a peak of 100,910 in 2022 when the post-Covid “race for space” was at its peak.
Lower mortgage rates and falling house prices keep more first-time buyers in London…
Falling mortgage rates are starting to turn the tide on the rising number of first-time buyers leaving London. First-time buyers made up 30% of those leaving London during the first six months of 2024, a figure that has been trending upwards since 2013.
However, this year’s figure has been capped by falling mortgage rates and lower house prices, which have improved affordability conditions and enabled more people to stay in the capital to buy their first home. In fact, first-time buyers purchased a record 48% of homes sold in London so far this year, up from 41% in 2023 and 28% a decade ago.
The impact of lower mortgage rates on the spending power of first-time buyers has been significant. The average first-time buyer purchasing in London spent £443,550, £39,360 more than last year. This increase in purchasing power, coupled with falling prices across the capital, has allowed more affluent first-time buyers to purchase larger homes in more sought-after areas.
This shift means that the average London first-time buyer with a 15% deposit would spend £2,070 a month on their mortgage repayment, £273 less a month than if they bought in the first half of 2023.
…However, less affluent first-time buyers are still leaving London.
Despite affordability improving, purchasing a home in the capital is still prohibitively expensive for many would-be first-time buyers. While lower mortgage rates have helped, London outmigration continues to be driven by less affluent first-time buyers who couldn’t afford to move last year and can only afford to buy outside the capital.
This is reflected in the average purchase price of first-time buyers leaving London falling to £306,080 in H1 2024, £30,010 less than last year and the lowest price since 2019. Consequently, the typical first-time buyer leaving London is paying £1,430 a month on an 85% LTV mortgage, a record £642 a month less than someone staying in the capital.
First-time buyer leavers are staying closer to the M25…
Four years on from the pandemic and many city workers have settled into a new normal when it comes to going into the office. First-time buyers are more likely to stay closer to London than they have been over the last few years. Keen to retain their links with the capital, this has put the more affordable M25 towns firmly back on the map for younger homeowners.
The average first-time buyer leaving London moved 23.8 miles this year, 2.6 miles less than last year. With people spending more time in the office, the share of first-time buyers swapping London for the countryside has halved from its 6% peak in 2020.
11 of the 15 local authorities that have seen the biggest increase in the number of first-time buyers looking to move from London are located in the South East or East of England, often with convenient transport links into the capital. Waverley tops the list, where there were 257% more first-time buyers from the capital looking to buy in the first six months of 2024 compared to the same time last year.
…whilst upsizers are moving further afield
The first half of 2024 marked the first time since 2019 that movers made up a bigger share of the Londoners purchasing a home outside the capital. In a bid to make their equity stretch further, those trading a home in London accounted for 48% of people buying a home outside the capital this year, slightly up from 47% in H1 2023.
While first-time buyers are staying closer to home, the cost of upsizing means the average mover is moving a record 39 miles out of the capital. This is six miles further than in 2019 and 65% further than the typical first-time buyer.
Furthermore, long-distance moves are becoming the norm. Twenty-six percent of households trading a London home for one outside the capital moved more than 100 miles, significantly higher than the 2015-19 average of 17%. On average, they’re moving 50% further than they were a decade ago, with high transaction costs such as stamp duty reducing the number of shorter, more frequent moves.
Gedling and North Somerset, are the two local authorities where the number of movers looking to leave London has more than doubled between H1 2024 and H1 2023.
