According to Hamptons International so far in 2014, there has been a surge in the number of Londoners buying homes outside the capital, seeking value elsewhere. Hamptons report that there has been a massive 75% increase in the number of Londoners purchasing homes outside London compared with the same time last year.
The report reveals that not only has the volume of Londoners leaving the capital increased but the value of homes bought in other part of the countries has also increased with 14,700 homes acquired by Londoners since January this year having an average value of £330,000.
When the figures are extrapolated over the last twelve months they get even larger with 44,000 homes purchased representing £15bn in value – both the highest volume and value since 2007.
Growing price disparity between London and the South
House prices have increased significantly in London over the last year, showing an almost 20% rise in value with growing disparity between the capital and other regions of the UK. Hamptons state that the gap between property values inside and outside the M25 is now the widest it has ever been suggesting that this could be a signal that the regional differential is close to reaching its peak.
London’s property values are now at twice the levels of the rest of the South of England. An average one-bedroom flat in London is marketed at £600,000 which would be enough to buy a three-bedroom family home outside the capital.
Londoners are increasingly seeking a better quality of life without housing costs eating into their disposable income and homeowners are cashing in on the substantially increased capital value of their property, reinvesting in cheaper property markets without sacrificing their standard of living.
Londoners more willing to commute to work
According to the report, Londoners have accounted for 6% of sales outside the capital in Britain so far in 2014, up from 4.5% in 2013 – the highest proportion since 2007. Londoners are migrating mainly to the East of England and the South East, where they made up 14% and 11% of all sales respectively.
Head of research at Hamptons International, Johnny Morris said that “the flow of families out of London, a natural part of any city’s life cycle, has been supressed over the downturn. It’s a combination of this pent up demand and the record difference in prices between London and the rest of the country that is driving a surge in Londoners buying homes outside of the capital.
“With London’s recent meteoric price growth, a lack of stock and talk of bubbles, this could well be the tip of the iceberg for Londoners looking to make a move outside of the capital. The country markets, driven by a flow of housing wealth from the capital, have the potential to outperform the capital in future years.”
Migration trend set to continue
Although a natural part of the city’s life cycle, Londoners looking to up or downsize property are being left with no alternative but to look outside the UK’s most expensive property market. Hamptons see the trend increasing in coming months:
“The outward migration trend seems set to continue in the months to come. There are increasing numbers of new London vendors coming onto the market with us who have decided to capitalise on the value gap between London and the country. The number of buyers registering with our offices outside of the capital is also up by 16% year on year whilst buyer numbers in London are relatively static which further demonstrates this trend,” says Marc Goldberg, Head of Sales at Hamptons International.
It is widely believed that a combination of increased foreign investment in London-based property, the government’s Help to Buy scheme and a shortage of affordable housing is behind the exaggerated increase in prices in the capital which far exceed rises in incomes in the last twelve months.
With transaction volumes in London remaining static and increasing volumes of buyers looking outside the capital, it may be that house prices will now start to cool, eventually falling more into line with other regions of Britain.
- Wednesday 04 June 2014