There is a way to buy your dream home at an affordable price if you are willing to accept an extra hour of commute, new research from Lloyds Bank shows. Average house prices drop from £722,000 in central London to £272,000 in commuter towns an hour outside of the city, the study reveals. Towns an […]
There is a way to buy your dream home at an affordable price if you are willing to accept an extra hour of commute, new research from Lloyds Bank shows.
Average house prices drop from £722,000 in central London to £272,000 in commuter towns an hour outside of the city, the study reveals.
Towns an hour’s commute from central London, which include Crawley, Newbury, Colchester and Chatham have an average property price of £272,000: a significant contrast to the average of £722,000 for a property close to their place of work in central London (zones 1 and 2).
In contrast, the average annual rail cost of £4,944 from these areas in the ‘one hour zone’ is relatively small, and means a commuter would need to travel for 91 years for the total rail costs to wipe out the difference in average house prices.
Twenty minutes of travel make a big difference in price
Twenty minutes closer and house prices begin to rise. Commuters from towns approximately 40 minutes away from central London, including Reading, Stevenage, Sidcup and Billericay will have to pay an average house price of £349,000. This is still cheaper by around £373,000, or 52 per cent, than in zones 1 and 2.
Pay-to-home price ratio makes commuting worth it
One of the key factors for most commuters is the significantly higher annual salaries that can be earned from working in central London compared to their place of residence. In many cases this helps make housing considerably more affordable.
The most affordable commuter town is Wellingborough in Northamptonshire where the average house price (£160,245) is 3.4 times the average annual earnings for zones 1 and 2 (£46,915).
The next most affordable commuter town is Kettering (also in Northamptonshire) with an average house price that is 3.8 times the average annual earnings in zones 1 and 2; followed by Peterborough (3.9), Chatham (3.9) and Luton (4.0). Commuters in these towns are earning, on average, close to £13,000 more than they would in their place of residence (£34,160).
Andrew Mason, mortgages director at Lloyds Bank, commented:
“It’s no surprise, for London at least, that the further you commute the larger the difference in house prices – though, of course, the journey also gets longer and more expensive. The decision to commute is not simply a trade-off between financial costs and journey times. Quality of life is an important consideration and in nearly all towns in this survey housing affordability is significantly better with a London salary compared to what can be earned locally.
“For commuters with up to an hour’s journey to central London, the reward is an annual salary that is, on average, 22%, or £8,500, higher than what they could earn in their place of residence – which is close to £38,500.”
