Why are so many Londoners quitting the capital?
Where you aware that in the last decade, the number of people deciding to pack their bags and leave the capital to head north has increased dramatically? in fact, it is estimated that it has more than tripled in the last ten years. According to Hamptons International, over 30,000 people in London decided to purchase a house outside of the city in the first six months of 2018. That equates to a rise of more than 16% compared to the year previously, and overall house price growth has led to a 61% increase in the number of people based in London deciding to leave and go elsewhere since 2008. So what has led to this growth? We take a look at the different factors contributing to the rise.
Where are Londoners moving to?
It was reported in The Guardian in December last year that nearly every single part of England and Wales last year saw an ex-Londoner move there to start a brand new life, up 14% from the decade previous and at its highest overall level since 2006. The research by agents Hamptons International has revealed that city dwellers are increasingly using the profits they have made in London to spend on much larger properties up north as well as in the Midlands, as they are able to get much more for their money compared to what they would receive in London. It is thought that compared to just one in 17 in 2008 deciding to leave the city for the north or the Midlands, this has now risen to almost one in five.
For example, it is estimated that the average property buyer from London leaving the capital will spend around £424,610 for a new property elsewhere, often through using bridging finance. According to The Guardian, this is the equivalent of paying for a large detached house in a pleasant area of Birmingham, compared to just being able to purchase a two-bed flat above a supermarket in east London.
However, whilst there has been an influx in terms of the number of buyers in the north and Midlands in the last decades, it is still the case that the majority of Londoners decide to move somewhere close to the city. Over 38% of leavers decided to move to the south East, and 30% to the East.
Why are Londoners moving?
There are a number of different factors that all seem to be leading buyers to decide to up sticks and move from the capital. Here are some of the main reasons why:
The cost of property
As most of us are aware, the price of property in the capital is extremely high compared to elsewhere in the country, and this has been widely stated as the main reason so many people are leaving London to buy property elsewhere, especially when salaries have not been rising in accordance to inflated property prices. According to Zoopla, the average homebuyer can expect to pay a staggering £477,000 for a property in London, far higher than in other parts of the UK such as the north and in the Midlands. With affordability being such a huge problem, it comes as no surprise that other areas of the UK have become more appealing to home buyers.
Stamp duty charges
Another reason that has been led a number of people to leave the capital has been the heavy costs of stamp duty for second-movers. Hamptons revealed that they have seen more people decide to upscale and buy a larger home much quicker than they would usually do in order to avoid having to pay more stamp duty on further moves as they trade up. This has then led more homeowners to look at heading up north due to the lower prices of stamp duty. For example, if buying a detached home in the south of England, a prospective buyer could end up paying around £14,780 in stamp duty costs, whereas if they were purchasing property in the north, this would be around £5,358, a considerable drop in price.
Difficulties for first-time buyers
It has also been revealed that the number of first-time buyers who live in London deciding to then purchase a property outside the capital has doubled in the last five years, rising from 16% in 2013, to now over 31%. This is largely due to the issues first-time buyers have faced being able to afford to purchase a home in the capital, with over one in three young adults in the city finding it impossible to be able to buy their own property in London.
Who will this end up affecting?
Of course, lower house prices and better value for money in other parts of the country makes the move from London to elsewhere advantageous for city dwellers. But what effect does this have on those, not from the city? Experts are concerned that this rise in demand elsewhere in the UK is going to then lead to a spike in property values in these areas, with people having less disposable income than those coming from London.
Take for example the fact that the typical Londoner buying a property outside of London spends on average 1.6 more than homebuyers from other regions in the country. Furthermore, in more than seven local authorities that are on the border of Greater London, it was now the case that more homes were bought by leavers than local residents, and around one in six homes in the East is now estimated to be bought an ex-Londoner.
In terms of the exact effect this will have on the property market value in these areas, only time will tell.