Stephanie McMahon
Head of Research
For some it’s always been the dream – live and work during your younger years in London before moving to the countryside to raise a family.
And with London prices outpacing the rest of the country, homeowners in the capital are in an enviable position to sell up and buy something much larger elsewhere.
“The gap between London and the rest of the UK has continued to reach new highs,” says Robert Gardner, Chief Economist at Nationwide.
In fact, the average price of a home in London is double that of the rest of the country. Strutt & Parker research found that the price of one home in inner London could buy seven houses in the North East.
But many Londoners aren’t taking advantage of this price gap. Even those wanting to sell their property still want to buy in the capital. The latest Strutt & Parker research found that 76% of their clients currently selling in London want to remain in the city.
What is keeping people in London?
Put simply, a big the reason people aren’t cashing in their property equity is the attractive lifestyle. There are few cities on earth like London, with its instant access to culture, abundant green spaces, and world-class restaurants.
But, there’s another reason. Despite prices always looking like they’ve peaked, buying a home in London is still a smart investment.
“If you buy a yacht, you want to moor it in Monaco – if you buy a home, you want it to be in London,” says Guy Robinson, Strutt & Parker’s Head of Regional Agency.
“It’s a global city with advantages ranging from great culture to a strong financial centre and an ever-improving infrastructure.”
As one of the world’s strongest housing markets, those who currently own are reluctant to leave fearing they might miss another boom.
The old adage that ‘if you move, you can’t afford to move back’ is borne out by statistics. Typical property values across London are 44.8% greater than at the pre-downturn peak of 2007, according to research by Hometrack.
Plus, if you’re planning on staying in London for some time then it doesn’t matter about prices as your home will go up in relative value to others.
The pull of equity too much for some
Despite all this, there are some signs that some Londoners are finding the equity gap too big to resist. And when they do move, they are taking their property wealth to new locations, as well as classic commuter areas.
“We know that 10% of our clients who bought in East Anglia in the past year were from London,” says Stephanie McMahon, Head of Strutt & Parker Research. “About 18% who bought in the South East were from the capital and – in a growing trend – 15% of buyers in the South West came straight from London.”
This switch has been driven by better infrastructure, such as the electrification of mainline train services that will bring places like Bristol and Bath within easier reach of London. In the future projects like Crossrail, HS2 and the underground going 24-hours could mean more people decide to cash in on their London equity.
“As the national economy strengthens, so does London’s influence,” explains Guy Robinson. “People love the capital and many choose to stay, but now those who leave can enjoy the best of both worlds.