Those doing so have accounted for 26% of sales, compared to just 21% in 2013 and the trend comes as the price differential between the capital and the rest of the UK reaches an all time.
According to data from Rightmove, the average asking price of a four bed property in London is £983,000 compared to £659,000 in Surrey, the most expensive neighbouring county and £406,000 in Kent, the least expensive.
The increase in demand from both buyers moving out of London and those who are already living in the local market has resulted in all prime regions recording positive annual house price growth for the first time since September 2010. In fact, over the first quarter of this year, the prime suburbs saw stronger house price growth than prime London with an average increase of 3.8% and 3.6% respectively, according to Savills prime market indices.
While this does appear to be the first signs of the ripple of strong house price growth moving from London to the regions, annual growth in the prime suburbs at 7.5% still stands some?way below the 13.1% recorded in prime London.
‘Over the past two years we have already seen the ripple effect occur in London. Prime central London (PCL) led the recovery, outperforming all other prime regions until 2012 and average values are now a staggering 79% up on their 2009 trough,’ explained Sophie Chick of Savills Research.
‘However, the increase in stamp duty for properties over £2 million in March 2012, combined with increased activity in other parts of the market, meant that the ripple of strong house price growth moved out of PCL and into locations such as Fulham and Barnes, followed by Wandsworth and Islington,’ she said.
‘These outer prime London markets have a greater concentration of UK buyers than the more central locations and have continued to see strong growth with average values increasing by 13.2% over the past year,’ she added.
She pointed out that this is driven by a scarcity of stock coupled with multiple sources of demand, wealth being displaced out of central London, more household wealth being allocated to housing and a reluctance to make the traditional move out of London, resulting in the recycling of wealth within the capital.
As confidence continues to improve, Savills expects that growing numbers of London dwellers will be unable to resist taking advantage of the value gap and will make the move out to the regions.
Traditionally, London buyers have moved out along three wealth corridors. The predominant route is out to the south west and follows the Thames from Chelsea down to Richmond before reaching Surrey and moving along the A3. Alternatively, buyers move north via Hampstead to Hertfordshire or south east from Dulwich into Kent.
For the more adventurous seekers of value, locations in the Midlands such as Stafford and Newark are increasingly popular choices, particularly for buyers who have to commute to London, but not every day. Both locations are about an hour and 15 minutes from London.
Beyond the London commuter locations, markets are more dependent on demand from wealth generated in the local economy, with the ripple effect from London taking longer to arrive, although all prime markets are now in recovery.
‘We anticipate that the prime urban markets across the country will continue to see strong house price growth and some of the demand will begin to trickle out to the neighbouring villages and countryside,’ concluded Chick.
