This gap between London and the rest of the country has become particularly pronounced in the prime housing markets according to Lucian Cook, director in the residential research department of Savills.
"Within the commuter zone, the number of buyers from London looking to buy in the country was down by a third in the first six months of 2011 compared to the same period a year earlier," he said.
"Buyers taking equity out of London have traditionally fuelled house price growth in prime regional markets. The weakness of the ripple of wealth out of the capital this year has reduced competition for prime regional property, suppressing values and in some instances resulting in a second slip in prices."
By contrast, value growth in the prime markets of London has been strong with growing numbers of domestic owners choosing to stay or reinvest in London rather than move out. Prices for family houses in prime South West London have risen by 8.9% in the past year alone.
The result is that regional property is now better value for Londoners looking for more space or a lifestyle move than it has been for a decade.
A typical four bed family home in prime south west London is now in the region of £1.325million. By contrast, an equivalent family home in the prime commuter zone just outside the M25 is around £805,000 – a saving of £520,000 compared to an equivalent figure of 190,000 five years ago.
In the outer commuter zone a similar house would average £765,000, the saving compared to prime South West London having risen from £190,000 at the end of June 2006 to £560,000 today.
"These differentials are likely to become too strong to resist for many buyers and so we expect to see the ripple effect re-establish itself next year. This year, the levels of unsold stock on the market are likely to limit price growth prospects in the prime regional market," Cook said.
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