While such an influx may come as good news for other regional economies, this movement could potentially dampen London’s economic growth and create a brain drain for the South East, according to the analysis from property consultants Cluttons.
It says that businesses could face the challenge of substantial workforce losses when their staff move elsewhere, which in turn may cause firms to opt for alternative global locations to base their operations where housing is less of a financial burden.
The research also found that 72% believe that house prices in London and the South East will rise more than earnings over the next decade and 35% of people renting are concerned they need to buy before prices rise any further.
It revealed that the average person renting believes it will take eight and a half years before they will be in a position to buy a home and 72% of people feel that home ownership would provide greater security over their housing situation.
On top of this 80% of those who took part in the research said that they want to buy a property because they think it is a good investment for the future.
‘With significant house price inflation in the South East above rises in real incomes, many aspiring homeowners are effectively being priced out of the region as they search for more affordable homes,’ said Sue Foxley, head of Cluttons research.
‘Anxiety over future price rises is one of the primary emotional drivers for those seeking to get onto the first rung of the housing ladder, who are subsequently looking elsewhere for their first property. Inevitably this will have a positive ripple effect on the rest of the UK as people move further out, thereby creating more demand in surrounding cities,’ she explained.
However, this mind-set must also be set against the growth implications for the London and South East economies. Employers may find themselves paying more to keep certain staff and attract them back into the region. Others may simply look to move their operations to a more suitable location where the provision of housing is less of a financial constraint, which would undoubtedly prove detrimental to the Capital’s and surrounding area’s economic growth,’ she added.
The research also looked at the emotional factors underpinning home buying, as well as the changing life circumstances which necessitate such movement. Buying as a couple and a need for more space were stated by 22% and 12% of people respectively as motivation for buying a home and 74% stated that a key benefit of owning a home is the element of personalisation.
Foxley said that the conclusion that can be drawn from the findings is that there is an overwhelming desire for home ownership, but the market forces that propel such behaviour continue to present dilemmas and challenges not only for the house building industry but also the wider economy in London and the South East.
