Research by Hamptons reveals that higher mortgage rates are the primary reason why more people, especially first-time buyers, are leaving London to buy property elsewhere in Great Britain. The percentage of Londoners buying properties outside the capital increased to 7.7% in the first half of this year, a slight decrease from the previous two years but still higher than the 2015-2019 average of 6.9%.

A significant finding is that first-time buyers are most affected by the increased mortgage rates. They constituted a record 30% of buyers who moved out of London this year, a figure which is more than double that of a decade ago. The distance that these first-time buyers are moving is also increasing, with the average being 25 miles in 2023, up from 14.3 miles in 2013.

Financial savings are a big driver of this trend. Those who choose to buy in more affordable areas outside London’s M25 are saving, on average, £8,656 in mortgage payments each year. Consequently, 37% of London-based first-time buyers left the capital to purchase a home this year.

Overall, the number of properties bought by Londoners outside the capital was 32,600 in the first half of the year. Most of these homes were bought by those leaving London permanently. The total number of such transactions is expected to be 53,780 by the end of the year.

Notably, this migration is also leading to significant savings in mortgage payments, an estimated total of £357m annually for all movers. In contrast, the total savings for those who left London in 2019 when mortgage rates were lower, was £157m.

Buying property outside London is also a strategy for households to reduce their mortgage debt. In fact, 18% of London leavers purchased their new home without a mortgage this year.

Interestingly, affordability pressures have led to London leavers purchasing smaller homes with their reduced budgets. This year, the average price spent by a London leaver on a new home outside the capital was £429,800, which is £60,000 less than in 2022.

The report also highlighted a shift in the destinations for London leavers, with fewer heading to the South East and more moving to the East of England. Epping Forest, Chelmsford, and Stevenage have seen a significant increase in prospective buyers from London.

The research suggests that the trend of London outmigration is likely to continue as mortgage rates remain high and property prices in some areas of London are lower than when they were bought, making moving to a cheaper area the only feasible option for many.