The London property market is the crown on top of the UK market and has been for many years. London itself has one of the most diversified cultural spreads and while Brexit has caused concerns, are things as bad as some people are suggesting? A report by Hamptons International highlighted the number of people selling their London properties and reinvesting in the Midlands and the North. While these figures may have increased significantly in recent years, are Londoners really ditching the London property market?
The report by Hamptons International confirms that the number of people relocating to the Midlands or North of England has trebled since 2008. In 2008, one in 17 selling their London properties reinvested in the North or Midlands while the figure now stands at one in five. We also know that the first six months of 2018 saw 30,280 Londoners selling their property to locate outside of the capital – an increase of 16% on the previous year. However, when you consider the population of London is around 8.8 million this is only a tiny percentage of London property owners.
Value for money
The price differential between London and the Midlands/North of England has been well documented over the years. Indeed figures suggest that those quitting London have spending power of over £420,000 when looking for a new home. Average spending for London leavers in the North and Midlands is as follows:
• North West (7% of London leavers) average spend £149,530
• East Midlands (6% of London leavers) average spend of £167,790
• West Midlands (5% of London leavers) average spend of £181,220
To give some balance, the North East of England only attracted 1% of London leavers with an average spend of £132,730. It is also worth noting that the South and East of England still attract the highest percentage of London leavers:
• South East (38% of London leavers) average spend of £575,010
• East of England (30% of London leavers) average spend of £394,480
• South West (9% of London leavers) average spend of £544,580
While there are various issues to take into consideration, such as employment prospects, these figures reflect the fact that London property owners would appear to be seeking better value for money. Evidence suggests that some of those moving to the South and East of England are commuting into London and even securing additional accommodation through the week.
Never underestimate London
It is fair to say that Brexit is being used as a reason to “rebalance” London property market prices compared to the rest of the UK. The difference in property values between London and the rest of the UK is well documented as is the perceived value for money. However, this does not take into account the unique characteristics of London.
So far, the expected evacuation of London by some of the leading business lights has failed to materialise to forecast nightmare levels. Yes, Brexit does create a number of challenges but the London business market, and the financial markets in particular, have a history of adapting to change. It would be unfortunate if the previously tight Brexit deadlines are extended, causing further confusion, but those who write-off the London property market do so at their own risk. The number of people leaving the capital is increasing but considered against the overall population of London there is nothing to worry about, yet.