Record numbers of first-time buyers leave London to get on property ladder

The number of Londoners leaving the capital to move elsewhere in Great Britain has fallen back this year but first-time buyers are increasingly looking beyond the city, Hamptons research shows.

Analysis by the agency brand shows with fewer sales taking place across the market, the number of homes bought by Londoners outside the capital fell to 69,190 in 2023, the lowest figure in nine years.

First-time buyers are expected to 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% of Londoners purchasing outside the capital in 2023, Hamptons said.

A decades ago, they accounted for just 12%.  Higher rates have limited their ability to borrow, forcing them to buy in more affordable areas.  Additionally, 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 (5,850).  On average, they moved a record 25.5 miles outside the capital this year, up from 20.8 miles in 2019.
 
The research found Londoners spent £28.7bn on homes outside the capital this year, 29% or £11.7bn below the 2022 figure and £20.1bn down on 2021 when outmigration peaked.  This puts spending back to pre-Covid levels.
 
The fall was attributed to fewer home sales across the market and affordability pressures.

Hamptons said the reality of higher mortgage rates mean London leavers are also spending less on their new home outside the M25.  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, the rate of London outmigration still increased over year and remains higher than pre-Covid.  Londoners made up 7.7% of all buyers purchasing property outside the capital in 2023, up from 7.3% in 2022 and 6.8% in 2019.

However, the pace of London outmigration remains lower than when it peaked at a 15-year high of 7.8% in 2021.

Aneisha Beveridge, head of research at Hamptons, said:  “With only around a million homes changing hands across Great Britain this year, fewer Londoners crossed the M25 in 2023.  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.”