Recent years have brought an increase in the number of people in their early 30s moving out of London, largely because of the capital’s high housing costs, research has indicated.
This exodus could lead to stronger demand for property in popular locations in the city’s commuter belt, such as Luton in Bedfordshire.
Experience Invest is currently offering investment opportunities at Imperial Square Luton, a development of one and two-bedroom apartments providing easy access to London via local road and rail links.
The London exodus
According to research by the Resolution Foundation think tank, London’s prohibitively high housing costs have resulted in more people leaving the city than arriving from the rest of the UK.
The overall population of the capital has increased by 1.6 million since 2001, but since 2009, the number of people in their early 30s moving out of London has doubled. This was one of the key factors in net internal migration out of the city rising to 90,000 in 2017.
Key findings from the study showed that, before housing costs, typical salaries in London are £28,600, compared to £26,400 for the rest of the UK. Taking housing expenses into account, however, typical London incomes are £21,350, below the UK average of £22,250.
Looking into some of the wider economic issues in the capital, Stephen Clarke, senior economic analyst at the Resolution Foundation, pointed out that London’s role within the UK economy has changed over the last decade.
“London’s economic growth is purely down to its population explosion, with hospitality replacing banking as the big growth sector in the capital,” he said. “Sectors that have traditionally powered London’s productivity growth, from finance to IT, are if anything going backwards.
“This shift has been great news for employment. But it means that London, far from racing ahead, has actually been holding the country back on productivity, with troubling consequences for pay and living standards.”
Putting London’s housing costs into perspective, Conor D’Arcy, senior research and policy analyst at the Resolution Foundation, noted that families in the 1960s spent on average a tenth of their income on housing expenses. Today, residents are spending more than a quarter of their income on housing – or more than 40 per cent if they live in private rented accommodation.
Had the cost of housing stayed consistent with income growth over the decades since the 1960s, Londoners today would be £5,400 a year better off.
These figures highlight the strong incentives for people – particularly those in their 30s thinking about starting a family – to move out of the city centre. For those who still want easy access to London for work and leisure, commuter belt property will prove an attractive option.
Investors can therefore expect to see strong demand for desirable accommodation in locations such as Luton, which means high occupancy levels and reliable rental yields.