Higher mortgage rates slow Covid-induced London exodus

Londoners accounted for 7.7% of all buyers outside the Capital during the first half of this year, outpacing the 2015-2019 average of 6.9%, although slightly below the 7.9% recorded in both 2021 and 2022.

The M25

Higher mortgage rates have paused the Covid-induced exodus of aspiring homeowners from the capital but they have also replaced the need for space when it comes to London outmigration, research from Hamptons reveals today.

Londoners accounted for 7.7% of all buyers outside the Capital during the first half of this year, outpacing the 2015-2019 average of 6.9%, although slightly below the 7.9% recorded in both 2021 and 2022.

OUTMIGRATION

If outmigration continues at the same pace throughout the remainder of the year, it’s likely that 53,780 Londoners will permanently leave the capital to buy a home in 2023 – almost the same number of homes sold in Wales last year (56,000).

First-time buyers made up a record 30% of buyers who traded London for another region in Great Britain, up from 27% last year and more than double the proportion (12%) recorded a decade ago.

With few able to afford to buy where they currently rent in the Capital, this move to a more affordable area outside the M25 (main picture) is set to save a typical first-time buyer with a 15% deposit £8,656 in mortgage payments each year.

So far this year, the average Londoner spent £429,800 on their new home outside the capital, just over £60k less than those who left in 2022 when mortgage rates were lower (see table).

AFFORDABLE

Aneisha Beveridge, Head of Research at Hamptons, says: “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
Aneisha Beveridge, Hamptons

“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.”

Top 15 local authorities with the biggest rise in the share of prospective buyers from London since 2019
Top 15 local authorities with the biggest rise in the share of prospective buyers from London since 2019.
Source: ONS/Hamptons

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