Londoners have spent £ 55 billion this year on buying property outside the British capital as a coronavirus pandemic spurred a rush for more living space, according to an analysis of official data.
The findings of real estate agent Hamptons are confirmed growing evidence that the pandemic has diverted housing preferences, with potentially serious consequences for the city’s population and housing market.
Capital residents have invested £ 54.9 billion in housing outside Greater London in 2021, the highest total in a single calendar year, buying property in suburban cities and beyond, according to a study that used HM’s revenue and customs data .
Londoners bought about 112,780 homes outside the capital, slightly less than the record 113,640 bought in 2007, which was a hot year for the real estate market, the Hamptons said.
Total spending this year broke a previous record of £ 36.6 billion in 2007 and rose by almost 60 per cent from 2020 in part due to rapid house price inflation over the past 12 months.
While a large number of transactions this year has been a national phenomenon, the increase in Londoners buying outside the capital is particularly pronounced, according to the study.
By forcing offices to close or reduce capacity, Covid-19 has caused rapid work at home, which appears to be taking place at least in the first quarter of 2022 due to the rapid spread of the Omicron coronavirus variant.
That’s one of the reasons why farmers are thinking about real estate further than they used to, said Neal Hudson, director of housing research firm Residential Analysts.
“There has been a general reassessment of housing, with people no longer having to travel to work as before. That is especially true in London, ”he said.
The opportunity to spend more time working at home has spurred what real estate agents describe as a “race for space,” with buyers looking for larger homes with gardens above downtown apartments.
The apartments have also lost some of their luster as a result of the lining safety scandal that followed Grenfell Tower Fire in 2017, which has largely hit apartment blocks built in the last 20 years.
The pandemic is largely responsible for the extremely large number of people who have left the UK capital this year, said Aneisha Beveridge, head of research at the Hamptons, adding that “2021 is likely to mark the largest migration from London in at least a generation”.
She added: “After this year’s madness, we expect the numbers to fall back a bit, especially as house prices outside the capital will continue to surpass London in the next few years.”
But most purchases outside of Greater London remained within the orbit of the capital, research has shown. Almost half bought in the southeast and a quarter in the east of England. The suburban towns of Dartford, St Albans and Elmbridge were special hotspots, according to the Hamptons.
For the past three decades, residents have been inclined to leave London since their mid-30s as they start families and seek larger, more affordable real estate. The city’s population at the time was constantly growing due to immigration from the EU and higher levels of births than deaths.
But Hudson and Beveridge have suggested that, if sustained, higher outflows along with slower internal post-Brexit migration could slow the capital’s population growth.
“If there is pressure to reduce the population of London, it could lead to pressure to reduce house prices and rents,” Hudson said.