The number of Londoners leaving the capital to move elsewhere in Britain dropped significantly in 2023, new research suggests.
It follows two years of near record outmigration levels, according to the findings by Hamptons estate agents.
It claimed Londoners are set to spend a total of £28.7billion on homes outside the capital this year.
It is a massive 41 per cent fall – or £20.1billion – from the £48.8billion recorded in 2021 when outmigration peaked.
Londoners are set to spend £28.7billion on homes outside the capital this year, according to Hamptons
Hamptons research shows the total value of homes bought outside the capital by Londoners
The figures show a significant shift from the pandemic when house hunters were engaged in a so-called ‘race for space’ as they shunned urban areas in favour of rural and coastal locations following several lockdowns.
Aneisha Beveridge, of Hamptons, said: ‘With only around a million homes changing hands across Britain this year, fewer Londoners crossed the M25 in 2023.’
London leavers are buying in smaller numbers and are faced with higher mortgage rates
Hamptons said the fall was driven by two factors. First, London leavers are buying in smaller numbers, following a national trend of fewer homes being sold.
The number of homes bought by Londoners outside the capital fell to 69,190 in 2023, the lowest figure in nine years and down from a peak of 100,980 in 2021.
And second, the reality of higher mortgage rates means London leavers are also buying cheaper homes outside the M25, in order to be able to afford the mortgage payments.
Affordability pressures meant the average Londoner buying outside the capital spent an average of £415,020 in 2023, £89,990 less than the £505,010 average spend last year.
Even though the number has dropped, affordability pressures have meant that the rate of London outmigration has increased during the past year and remains higher than pre-Covid.
Londoners made up 7.7 per cent of all buyers purchasing property outside the capital in 2023, up from 7.3 per cent in 2022 and 6.8 per cent in 2019.
However, the pace of London outmigration remains lower than when it peaked at a 15-year high of 7.8 per cent in 2021.
The Hamptons data also revealed the share of London leavers who have downsized
Of the 32,090 households who sold a home in London and bought outside the capital, a record 77 per cent spent less on their new home than they sold their main residence for.
This figure has jumped from 60 per cent in 2022. On average, movers are spending 39 per cent less on their new home outside of London.
This releasing of equity has meant that a record number are paying cash for their new home outside the capital.
Of the households spending less on their new home in the regions, a record 81 per cent bought without a mortgage, up from just 51 per cent in 2022.
Typically, these are older people leaving London for a smaller home, downsizing to free up equity or clear their remaining mortgage balance in the face of higher interest rates.
With only around a million homes changing hands across Britain this year, fewer Londoners crossed the M25 in 2023, says Hamptons
Local authorities with the biggest rise in the ratio of London buyers to house hunters from elsewhere
These Londoners are freeing up bedrooms too. A total of 41 per cent of those trading London for the regions moved to a home with fewer bedrooms, up from a low of 23 per cent in 2020 when the race for space was in full swing and buyers moved in search of larger homes.
Overall, those relocating to a smaller home made up 13,030 of the 32,090 movers leaving London this year.
In total, those trading a home in London for a cheaper home outside the capital freed up 5,210 bedrooms this year.
First-time buyers will make up a bigger share of sales nationally this year and it’s a similar story for London leavers.
First-time buyers made up a record 30 per cent of Londoners purchasing outside the capital in 2023.
Ten years ago, they accounted for just 12 per cent. Higher rates have limited their ability to borrow, forcing them to buy in more affordable areas.
Hamptons revealed the number, share and total value of homes bought outside the capital by a Londoner
In addition, cost of living pressures and record-breaking rental growth in the capital have also made it difficult for them to save up.
London based first-time buyers are set to purchase 20,940 homes outside the capital in 2023, more than triple the number a decade ago at 5,850.
On average, they moved a record 25.5 miles outside the capital this year, up from 20.8 miles in 2019.
Consequently, it’s the more affordable commuter areas outside the M25 that have seen the biggest rise in the ratio of London prospective buyers to locals.
In 2019, Londoners almost matched applicants from elsewhere who were looking to buy in Epping Forest.
However, Londoners now dominate the market and this year there were 3.9 house hunters from the capital looking to buy in Epping Forest for every house hunter from elsewhere.
Aneisha Beveridge, of Hamptons, added: ‘However, those that did tended to be downsizers or first-time buyers. Downsizers, tired of London life, are looking further afield to release cash and clear their remaining mortgage balance.
‘Meanwhile, higher mortgage rates have reduced first-time buyers’ purchasing power, pushing them to search for more affordable homes further afield.
‘With mortgage rates expected to continue falling in 2024, the affordability picture should improve. We expect this to slow the pace of London outmigration somewhat, as younger Londoners can increasingly afford to buy locally.
‘Upsizers, who have sat tight in a subdued 2023 market, are likely to come back into the fold as it gets cheaper to borrow, meaning they’re likely to dominate those leaving the capital next year.’
