Lokku Labs carried out research into the cost of living close to work in January 2010. It analysed the financial impact of living in London against commuting to it. Factors considered were house prices per residential area with commuting flows to London, travel costs and time and productivity costs. Special attention was paid to detecting geographical differences between relative commuting times and house prices.
Londoners spend 38 minutes travelling from home to the workplace, 10 minutes more than the average UK worker (1). Depending on the use of car, the average may rise to 47 minutes (2). Is the long commuting worth it?
Distance from Work
Distance from work has often been the deciding factor for purchasing a home. If one resides in London, the closer one lives to work, the more expensive the home. Conversely, the further away from London one lives, the more affordable a home becomes.
Data shows that a mortgage repayment for an average three-bedroom home in Camden, London, will cost about £3,630 per month. If one works in St. Pancras, two tube stops away, the tube fare will be about £100 per month, a total of £1,200 a year. The total cost of mortgage repayments and daily travel combined would total about £44,760, annually.
We found by that buying a home outside of London using a property search engine like www.gartoo.co.uk it is easy to find a middle-of-the-market three-bedroom home in a place like Canterbury from about £150,000. Depending on the number of years required for repayment and the interest rate, the monthly mortgage costs on a £150,000 property will be around £886 per month at 5% over 25 years.
Travel Costs and Time
The annual train ticket for travel from Canterbury to London, a journey of about 80 minutes, is £300 per month. So the savings on living outside London, in terms of mortgage repayments and travel costs combined, total around £2,544 per month.
Below is a table comparing the average monthly mortgage repayment cost of a three-bedroom house with commute time and cost for a person working at St. Pancras in Camden.
London Total Monthly Cost vs. Time Spent Commuting
*Data collected using www.where-can-i-live.com/londonproperty. National rail train costs are for 8am departure and 6pm return on a weekday for an adult. Monthly commuting costs are based on commuting 20 days a month including rail card discount.
Edinburgh Total Monthly Cost vs. Time Spent Commuting
Birmingham Total Monthly Cost vs. Time Spent Commuting
A Vast Choice of Geographical Locations!
Not everybody is keen to make a million in the city. For some quality of life matters more, and there are things besides work that are important, like time with family or exploring other places. There are many different affordable and interesting places to live across the UK!
Dover
An apartment in Dover, where a £25 return ferry trip for a day’s shopping in Calais, France, adds a dash to life. Apartments available for sale in this area can start from about £40,000. Again, with a repayment of £171 per month it’s very affordable, and there might be no better time to buy than now!
Yorkshire
In northern England, one can purchase a house from £25,000 (3). Yorkshire has much to offer. Those who are attracted to outdoor activities, for example, would enjoy this county particularly. The Pennines protect this area from too much rain, which means Yorkshire benefits from a drier, sunnier climate than some other counties.
Shropshire
Towards western England, three-bedroom homes with gardens can be purchased in the charming county of Shropshire at great prices! Quaint, medieval market towns like Shrewsbury offer apartments for just £30,000 (4). Castles abound in the area and Ludlow, in south Shropshire, offers equally tempting surprises in the home market. The repayment on a mortgage of £30,000 over a period of 20 years at a 5% interest rate would cost £200 per month.
Surrey & Berkshire
Whilst not the cheapest areas in which to purchase homes, there are still some bargains to be found in Surrey and Berkshire. From Croydon through to Meadowlands, homes can be purchased from around£50,000 (5). In Berkshire, one-bedroom apartments change hands for about £60,000.
Compared to London…
For those working in London, there is a trade-off between accommodation and daily travel. Many are choosing to move to locations they had previously not considered and found that the joys of big city life are not lost entirely when moving to less populated areas. There are good schools, great restaurants and pubs, and sophisticated shopping malls to be found all around the UK.
Productivity Costs
Productivity losses from delays in public transport and stress from traffic add to the costs of commuting. On the other hand, lower crime rates and access to better schools in the suburbs may partially offset the costs.Although employees with higher qualification levels are likely to travel further to work than those with lower qualifications (6).
Conclusions:
Commuters do not behave rationally when deciding where to buy a house. The differences of value for money of commuting areas cannot be be sufficiently explained by house prices, commuting effort and even environmental quality. There is clustering effect (8) here by which areas that hold historical ‘High class’ or ‘Low class’ residential status, perpetuate it even when conditions change over time. Richmond for instance is allegedly the worst value area near London because the average three-bedroom house price is £703,000 and a commute into Central London takes 53 minutes, but also the noise pollution in some areas of the borough are “can damage people’s health” (9).
Wealthier families tended to live much further away but a rational home hunter working in Central London would nowadays buy a house in Stratford because the area is the best value spot: the average three-bedroom house price is £262,000 and a commute into Central London takes 16 minutes. Stratford is arguably the paradigm of the regeneration of a few areas in London: the impact of the Olympics, the new transport links and its strategic location in the future expansion area of London will almost certainly gentrify the area beyond recognition in a decade.
Whilst it can be still financially sensible to commute long distances to London, the trend of accelerating travel costs above inflation and the increasing travel times are quickly closing the gap to the cost of living in London. We identified Bedford and Stratford as the two best value areas in terms of the relative cost of housing versus travel time, where the average three-bedroom house costs £256,000 (Stratford) and £186,000 (Bedford).
Commuting to Central London takes just 16 minutes from Stratford and 43 minutes from Bedford. We also identified Richmond as the worst value area, where the average three-bedroom house price is £703,000 and a commute into Central London takes 56 minutes.
In Edinburgh we identified the town of Nidrie as being the best value area in terms of travel time and housing cost, here an average three-bedroom house four miles from Edinburgh costs just £122,000. We also identified Morningside as being the worst value area, despite being just 2 miles from Edinburgh the average three-bedroom house price is £400,000, which is almost double the cost of a similar house in Edinburgh city centre.
In Birmingham we identified the town of Bordesley Green as being the best value area in terms of travel time and housing cost, here an average three-bedroom house two miles from Birmingham costs just £125,000. We also identified Portway as being the worst value area, where the average three-bedroom house located 10 miles from Birmingham city centre costs £402,000.
Data set – Edinburgh
Data set – Birmingham
You may download a full report on the cost of commuting in London area: Final Affordable Homes can be bought by all in London.
Sources:
1. Greater London Authority, 2009, http://www.london.gov.uk/focusonlondon/docs/fol09-13-transport.pdf
2. Elephant.co.uk, 2009, http://www.elephant.co.uk/contactUs/pressOffice/pressReleases/daily-commute-is-47-minutes-of-hell-for-UK-motorists.php
3. http://www.nestoholic.com/houseprices/yorkshire (January 2010)
4.http://www.nestoholic.com/houseprices/shropshire
5. http://www.nestoholic.com/houseprices/surrey
6. Greater London Authority, 2009, http://www.london.gov.uk/mayor/economic_unit/docs/wp36.pdf
7. http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml
8. http://en.wikipedia.org/wiki/Urban_structure
9. http://www.bclocalnews.com/richmond_southdelta/richmondreview/news/67740442.html
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