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Evening Standard
Evening Standard
Business
Meghann Murdock

Has the race for space been run? Number of Londoners buying homes outside capital slows to pre-pandemic level

The share of Londoners buying outside the capital has slowed this year

(Picture: Shutterstock / ZGPhotography)

The number of Londoners buying homes outside of the capital slowed this year, returning to levels seen before the ‘race for space' sparked by lockdowns and a stamp duty holiday at the height of the coronavirus pandemic.

More than 81,000 homes outside the capital were bought by Londoners in 2022 — equating to 20,000 fewer purchases than in 2021 when Londoners bought 7.8 per cent of all UK homes sold outside of London, according to a new report by Hamptons.

Key additions to property jargon over the past two years include 'London leavers', 'TW*T commuters' and 'boomerang buyers' but the reopening of city offices didn't translate into the immediate boomerang effect some imagined for the property market.

So, with flexible working still a reality for many, Londoner migration to areas outside of the capital remains above the levels seen in 2019.

Hamptons’ head of research Aneisha Beveridge, said: “London outmigration appears to have passed its peak.  While 2021 was dominated by space seekers swapping the bright city lights for pastures green, 2022 signalled the return to the office.”

“That said, the widespread popularity of flexible working has meant that Londoners continue to move that little bit further out of the city to gain more space, meaning outmigration numbers remain higher than pre-Covid times.”

The 'race for space' sparked fierce competition in suburban areas meaning that buyers have had to move further afield — 4.4 miles further on average — for homes that meet their requirements. The sudden influx of buyers hoping to make savings of up to £15,000 by completing before the end of the stamp duty holiday in June 2021 saw strong price growth outside of London.

Higher house prices and tighter household budgets mean that while 30 per cent of movers were able to buy homes with four bedrooms in 2020, this fell to 26 per cent of movers able to do the same in 2022.

First-time buyers sacrifice location for the ladder

Despite the number of London movers buying outside of the capital dropping towards levels seen before the pandemic, affordability pressures mean that first-time buyers accounted for a record 28 per cent of those buying outside of London in 2022.

“Next year, we expect the pace of London outmigration to cool further as pent-up demand from the Covid related trend wanes,” said Beveridge.

“But affordability pressures, and in particular the cost of higher interest rates, may mean that more Londoners are forced to move further afield to buy a home. 

“Our latest data suggests that first-time buyers in particular are sacrificing location in order to climb onto the housing ladder.  And this looks set to put a floor under London outmigration numbers in 2023.”

Buy-to-let investors look to leave London

The search for higher returns to cover rising costs has seen London-based investors increasingly look to other regions.

A record 21 per cent of those buying in the regions in 2022 were London investors, which is up from 16 per cent in 2021.

So while the share of investors and first-time buyers finding homes in UK areas outside of London has exceeded levels seen before the pandemic, the share of movers buying outside of London is declining.

Where are movers searching?

Household budgets aren't stretching as far as they once did — strong house price growth outside of London, the cost of living crisis and rising interest rates make for a perfect storm.

Londoners choosing to buy outside the capital are moving 34 miles away on average, an increase of 1.2 miles compared to last year.

Top 15 areas with the biggest increase in London home hunters

Local authority

Region

Percentage of applicants from London in 2022

Change since 2019

Wiltshire

South West

16%

15%

Swale

South East

23%

13%

Mid Sussex

South East

23%

13%

Hart

South East

23%

12%

Bath and NE Somerset

South West

21%

12%

Middlesborough

North East

17%

12%

Tonbridge and Malling

South East

23%

11%

Medway

South East

34%

11%

Hertsmere

East of England

77%

10%

Brentwood

East of England

30%

8%

North Hertfordshire

East of England

20%

8%

Horsham

South East

17%

7%

Tunbridge Wells

South East

25%

7%

Basildon

East of England

30%

6%

Chichester

South East

15%

6%

Source: ONS & Hamptons

What’s next for house prices?

The latest house price index from property portal Zoopla suggests demand for urban areas is increasing as the flight to rural and coastal regions “runs out of steam”.

Asking prices have increased 7.2 per cent over the last year, but falls are expected for the first half of 2023 in line with other forecasters.

Chris Druce, senior research analyst at Knight Frank, comments: “After a frenetic period for the country market, city living has come back strongly as workers have returned to the office, and the lifting of pandemic restrictions have boosted the appeal of urban living.”

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