Are first-time buyers leaving London?

by | Monday 1st Aug 2022 | Mortgage News


Latest figures released by estate agents claim that London’s first-time buyers leaving the capital to purchase their first home has increased by 1/5th compared to pre-pandemic figures.

It seems that a combination of the COVID-19 pandemic and the risking rate of inflation and cost of living is finally the straw that broke the camel’s back as the number of first-time buyers moving out of London has skyrocketed over the last 2 years. Of course, London is synonymous with expensive properties and above average cost of living however it seems that new buyers are being forced out of the capital to the suburbs where properties are not only more affordable, but you also get more bang for your buck.

Londoners bought more than 40,000 homes outside the city in the first six months of 2022, which is 19% above the pre-Covid average. ¾ of these buyers made a permanent move from the capital by buying a residential property, favouring places like St Albans, Crawley, and Chelmsford. On average, first-time buyers purchasing a property in the suburbs were spending £383,070 on their new home compared to the London first-time buyer average of £526,600.

If we take St. Albans for example, the average price of a property is £573,015 including houses and flats. In London the average price of a property is £708,713. Over 21% higher than buying in St. Albans. According to cost of living comparison website Numbeo, Restaurant prices in St. Albans are 33.53% lower than in London. Grocery prices in St. Albans are also 16.46% lower than in London. Basic utilities bills in London are 20.90% higher than St. Albans and a one-month transport pass (train, bus) is 32.07% higher in London than St. Albans. Numbeo calculates that a person or persons who have a monthly expenditure budget of £3,812.38 (including all bills, mortgage or rent, food, and clothing) would need to earn £5,200 in London to live a similar standard of life in the capital.

It seems that as well as affordability barriers in London (as mentioned above) more flexible working patterns post pandemic such as working from home or reduced hours have meant that 28 % of people moving out of the city to these outskirt areas were buying their first home! Better public transport and connection to the city must also play a big part in deciding to move out of the capital as these new buyers are moving further and further out.

Louis Mason, content, and communication manager at Oportfolio mortgages in London had this to say:

“The amount of people leaving London is hopefully a bit of a wakeup call for people, especially the housing sector and estate agents based in the city. London has been and will always be a desirable place to live and house prices will be higher than average however, how long can the London housing bubble go before it bursts? When a 1-bedroom apartment cost multiple millions of pounds? Some already do!

How about when the housing market grinds to a halt and only the mega rich can afford to buy a property? Firs-time buyers moving to the suburbs is a wise decision to get on the property ladder in my opinion, and why not? If you can get more for your money, there and you can save money on the cost of living while doing it?

Then, if you do want to move back to the city in a few years, at least you might have more of a chance of getting something if A) The house prices come down or B) You manage to save and gain enough equity in your property to either sell your house for a profit and buy in London or remortgage the property to a buy to let to release equity and use this to put down as a hefty deposit.

Either way, your mortgage advisor will be able to work out a plan of action for you if you decide to purchase in London or outside of London. Put your faith in them and they will help you to get whatever home ownership you need.”

If you or anyone else you know is looking to purchase their first property inside or outside of London, read our First-Time Home Buyer Questions To Ask A Mortgage Broker or contact our Putney mortgage team today to see how we can help you make your dream of home ownership a reality.

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