It’s becoming increasingly evident that one of the biggest Covid-related housing market trends – moving out of London for the country - could be here to stay. Despite more people returning to London offices this year, the rate at which households have upped-sticks and headed out of town has continued apace. Londoners bought 7.9% of all homes sold outside the M25 in H1 2022, the same proportion as in H1 2021, and up from 6.9% in 2019.
In absolute numbers, this means that Londoners bought 40,540 properties outside the capital during the first half of 2022, 19% above the 2015-2019 (pre-Covid) average of 34,140. However, this number has fallen a little since last year when the market spiked, in part due to the stamp duty holiday, and London leavers purchased 56,750 homes outside the capital.
If this pace continues throughout the year, Londoners are set to buy 88,210 homes outside the capital in 2022. This is equivalent to the total number of homes sold in Yorkshire & The Humber last year and 18% more than pre-Covid times when London purchases outside the capital averaged 74,980 each year between 2015 and 2019.
The vast majority (78%) of London leavers are heading out of the capital to set up a home, rather than purchasing a buy-to-let or second-home. Londoners making a permanent move out of the capital in H1 2022 bought 31,740 homes, 16% above the pre-Covid (H1 2015-2019) average as buyers continue to adjust to new ways of living and working. The remaining 8,800 properties were purchased as buy-to-lets or second homes.
While last year, families relocating to gain more space accounted for nearly three in five Londoners buying outside the capital, this year the figures have been driven by first-time buyers, many of whom were renting in the capital. Affordability barriers and flexible working patterns have meant that a record 28% of Londoners buying outside the capital this year were purchasing their first home, up from 22% in 2019 and 13% a decade ago. On average, these buyers spent £383,070 on their first home, equating to a total of £4.3bn spent in H1 2022. This year, 84% of first-time buyers stayed in the South of England, with 8% moving to The Midlands and 5% heading North. First-time buyers from London typically target more affordable commuter belt neighbourhoods, making up 34% of all buyers in Thurrock in H1 2022. Just South of the Thames, in Dartford and Medway, first-time buyers moving out of London accounted for more than one in five purchasers.
Meanwhile, the share of homes bought by movers, who traded their London homes to buy outside the capital, dropped to a record low. Just 50% of properties bought outside the capital by a Londoner were purchased by someone with a house to sell, down from 59% in 2019 and 74% in 2012. With price growth in the capital moving at a slower rate than many of the places movers are heading to, some London leavers have found themselves on the back foot. There’s also been an uptick in the share of Londoners investing in buy-to-let property outside the capital. Investors made up 19% of Londoners buying outside the capital this year, up from 15% in 2019. This means that a record 65% of London-based investors now purchase their buy-to-lets outside the capital, up from 26% a decade ago. The appeal of higher yields further North has meant that 28% of these investors purchased buy-to-lets in the North of England, up from 11% a decade ago. More London leavers are trading up to a more affluent area. Over half (53.9%) of households leaving London this year moved to a more affluent area. This is partly because more households have left less affluent areas of the capital. One in five (20.7%) London leavers came from the 25% most deprived areas of the capital this year, up from 18.4% five years ago.
Strong house price growth outside of London over the last year has meant that buyers have had to move even further outside the M25. The average Londoner moved 35 miles, the equivalent of trading Fulham for Farnham or Canary Wharf for Chelmsford – an extra mile further than in 2021. The distance London leavers move is likely to continue rising until at least 2024 as house price growth in the capital continues to lag behind the rest of the country.While many Londoners have traded the city lights for a country abode, we’ve also seen a rise in the number of people moving into the capital this year - both tenants and buyers, from the UK and abroad. So far this year 13.3% of people buying a home in London came from the regions, the second highest figure on record. A sign that perhaps London hasn’t quite lost its sparkle!
