Taking advantage of the value gap

As confidence in the market continues to improve, the number of Londoners moving out of the capital is rising.

31 March 2014, Words by Sophie Chick


All the prime regional markets, to a varying degree, benefit from wealth generated in London. This comes from either buyers relocating out of the capital or city dwellers investing in a second home.

After the credit crunch happened, the number of buyers who might previously have moved to a region outside of London diminished. Uncertainty around job security kept employees close to their desks and the lack of house price growth in the regions left house owners reluctant to sell their London property.

Consequently, one of the results of this was that the London housing market benefitted from both international investment and domestic buyers recycling wealth within London. In turn, this led to strong house price growth and the gap between prices in London and the regions reaching an all time high.

According to the Land Registry, the average house price in London reached £409,881 in January 2014, 162% higher than the average across the rest of England and Wales. This is the biggest premium since the index began in 1995.

A change in attitude

In January 2013, savvy buyers saw the signs of equilibrium returning to the country market, and began to take advantage of this price gap. Since then, we have seen a marked increase in the number of buyers relocating from London. This time, unlike before the credit crunch, many of these movers are not willing to entirely relinquish their foothold in London.

Our survey found that just under half the respondents currently living in London but looking to buy a country property are planning to sell up completely in London. Instead 24% of buyers are looking to have a country property as a main residence but keep a London pad, and a further 21% will continue living in London as their main residence during the week with a weekend country home.

This trend has become known as the ‘2 for 1’; the large increase in the value of a family home in London allows sellers to buy both a smaller London property and a prime country house. According to our survey these 2 for 1 property hunters will spend more of the budget – 59% – on the country property.

Graph 3.1
More than one direction

When it comes to choosing which location to make the move out of London to, the Home Counties are the most popular option given the ease of the commute back to the capital.

Traditionally, there are three wealth corridors which London buyers move along. The predominant one is the south west route, which 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.

The search for value

Our survey found the most popular county buyers are considering moving to is Kent, closely followed by Surrey. Both counties are known for their excellent train links to London, good schools and beautiful countryside, but a family house in Kent is still on average 20% cheaper than in Surrey. This indicates that despite buyers from London generally having high budgets, they are still searching for good value.

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 and both offer great value and lifestyle. The average value of a four bed, 2,000 square foot house in Lincolnshire is £230k compared to £937k in Surrey.

Try before you buy

An increasing trend when moving to a new area is to rent a property first in order to get a feel for the area before committing to a big purchase. Nearly half of our respondents who are currently based in London but are thinking of moving to the country – without keeping a London property – would consider doing this. Not only does it offer buyers the chance to explore the area, but it also gives a realistic idea of how onerous the daily commute into London is.

Graph 3.2
Value gap to narrow

As confidence continues to improve, we expect an increasing number of London dwellers will be unable to resist taking advantage of the value gap and will make the move out to the regions.

Consequently, we anticipate that 2014 will be the year when the value gap between London and the prime suburbs and inner commuter belt finally begins to narrow. However, it will be later in the cycle before the northern regions and Scotland feel this benefit.


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