MOST Londoners are hunkering down, hoping to weather Britain’s housing storm rather than look for more affordable homes outside the capital.

Londoners spent roughly £29 billion (S$48.74 billion) on homes outside the capital this year, almost a third less than in 2022, according to a report from broker Hamptons International.

While affordability pressures caused the rate of London outmigration to rise over the past 12 months, the number of homes bought outside the capital dropped to just over 69,000 – the lowest in nine years.

“With only around a million homes changing hands across Great Britain this year, fewer Londoners crossed the M25 in 2023,” Hamptons head of research Aneisha Beveridge said, referring to a major highway that encircles the Greater London area. “Those that did tended to be downsizers or first-time buyers.”

UK households have been under pressure this year from mortgage rates that reached 14-year highs and stubbornly high inflation. A report released in September by KPMG showed that almost a quarter of British mortgage holders were considering selling and moving to a cheaper property due to the surge in financing costs.

Almost 80 per cent of London leavers – many of whom downsized – spent less on new homes outside the capital this year, up from 60 per cent in 2022. On average, movers are spending 39 per cent less on their new property outside of London, and moving a record 41 km outside the capital.

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Of the households spending less on new homes, more than eight in 10 bought without a mortgage, up from about half in 2022. Some 41 per cent of London leavers moved to a home with fewer bedrooms, up from a low of 23 per cent in 2020.

With mortgage costs slowly declining after a pause in interest rates by the Bank of England, Hamptons expects outmigration to slow further as younger Londoners become more likely to afford a home in the capital.

Furthermore, the pace of spiralling rental costs is set to slow in London next year, according to a separate report from Zoopla, which could motivate some to stay in the city.

Still, first-time buyers made up a record 30 per cent of Londoners buying outside the capital this year, up from 12 per cent a decade ago, Hamptons said. Higher rates have limited their ability to borrow, forcing them to downsize and buy in more affordable areas.

“Downsizers, tired of London life, are looking further afield to release cash and clear their remaining mortgage balance,” Hamptons’ Beveridge said.

“Upsizers, who have sat tight in a subdued 2023 market, are likely to come back into the fold as it gets cheaper to borrow, meaning they’re likely to dominate those leaving the capital next year.” BLOOMBERG