Lloyds Bank has calculated that people living an hour away from London and making the commute to work every day are financially better off when compared to those living much closer to their place of work.
Commuting for an hour into central London mean homebuyers can save an average of £480,858 (60%).
House prices in a selection of towns about an hour’s train journey away from the capital (including Crawley, Windsor, Rochester, Peterborough and Oxford) are, on average, around £316,000; that is £480,858 lower than the average of £797,158 for a property within travelcard zones 1 and 2. This is also significantly lower (£199,778) than the average property price in zones 3 to 6.
The difference between house prices for commuters travelling approximately 60 minutes would pay for the current annual rail cost (£5,169) for 93 years.
Homebuyers looking to buy a home in a town approximately 40 minutes away from central London (including Hatfield, Billericay, Orpington and Reading), will pay an average price of £424,903; still £372,255 (47%) lower than in zones 1 and 2 – and with a lower average annual rail pass costing £3,615.
The difference of £372,255 would pay for the current annual rail cost for nearly 103 years.
Even at up to 20 minutes distance away from the heart of the capital, commuters from towns such as Ilford and Elstree benefit from an average house price that is £299,328 lower than in central London. This is enough to pay the current annual rail cost of £2,481 for 120 years.
Some commuters to central London live in areas that command higher house prices. These include commuters from Beaconsfield, who pay an average of £1,054,215 compared to the average price house price of £797,158 for those living in central London, a difference of £257,057. Gerrards Cross (£903,142), Ascot (£824,421), Weybridge (£822,672) and Wimbledon, (£807,574) are also more expensive.
Andrew Mason, mortgage product director at Lloyds Bank, said: “Considering how far away any potential new home is to your work is often a key factor when buying a new home. Whilst it’s not surprising that homes outside of central London are typically cheaper, the difference is significant.
“Commuting to London is a smart move for those wishing to benefit from the higher wages on offer whilst buying a cheaper and typically larger home.
“What’s interesting is that the exact opposite can be said for the UK’s other two largest cities, Birmingham and Manchester, where it costs more to live outside of the city and make the commute.”
The most affordable commuter town is Wellingborough in Northamptonshire where the average house price is £197,743, 4.5 times the average annual earnings for central London (£43,923) compared to 5.7 times the average wage for those working within Wellingborough (£34,663).
The next most affordable commuter town is Kettering, also in Northamptonshire with an average house price of £206,873 followed closely by Peterborough in Cambridgeshire (£207,458). Both with an average house price that is 4.7 times the average annual earnings for central London, which is a considerable difference to the average annual earnings of those working in Kettering (6.5) and Peterborough (6.6).
Commuters in the 10 most affordable towns are earning, on average, over £9,000 more per year than they would in their place of residence (£34,807).
Unlike London and the South East, commuters to some of the UK’s major cities are paying more than if they lived in the city.
For commuters to Britain’s second and third largest cities, Birmingham and Manchester, house prices are often higher outside the city. The average house price in Birmingham is around £181,758, but several towns around 40 minutes away (rail) – Derby, Coventry, Burton on Trent and Leamington Spa – command higher average house prices of £225,353. Commuters from these towns also have to pay £2,261, on average, for a current annual rail pass.
The same applies to a number of towns that are approximately 40 minutes away from Manchester, such as Warrington, Chorley, and Macclesfield, which all have a higher house price (£216,236) than in Britain’s third largest city (£174,972).
Article originallt posted by Best Advice