I live in Stockport and I am often surprised about housing costs (buying or renting) being quoted. I “sort of” knew that London and the South East are more expensive. This article collects together some information revealing some big differences.
My view now is that London is such a special case that it should always be analysed and quoted separately. The impact on people, and the policies that might be needed, shouldn’t be lost by considering only broader averages such a “region” or “country”. The experiences of people in London can’t be generalised to England or the UK, and English or UK averages don’t reflect the specific problems in London.
(Caution: different sources give different numbers, and all the numbers vary significantly over time. But in all cases London stands out as a special case).
Renting and buying costs
Renting costs and buying prices for houses are shown for London and the next 3 biggest cities. (Plus Stockport, where I live!) Renting costs are from Rentright Ltd (February 2013), and buying prices are from BBC’s UK house prices July to September 2012. (Some other sources show a smaller renting cost ratio between London and the rest).
The heights of the columns are relative to London’s, which are therefore 100%.
This shows “first time buyer deposits as years of saving capacity, two person household”, from “Oxford Economics - Housing Market Analysis July 2011“.
Apart from showing that London is a special case, this also shows that an average for England is not very representative of either London or a number of other regions. Such an average exaggerates the problem for people in the “North”, while under-estimating the problems for people in the “South”, especially Londoners.
(Or put another way, this shows that experiences of Londoners don’t represent the experiences of people elsewhere, especially in the “North”. To a lesser extent, the experiences of people in the “South” generally don’t represent the experiences of people in the “North” either, or vice versa).
Owner occupier percent
The average percentage of households owning their own homes (often with a mortgage) is less than the nearly 80% of some older cohorts, and various sources show that the percentage is typically dropping. The effect in London is much more pronounced than elsewhere. (From “Oxford Economics - Housing Market Analysis July 2011” 2010 values).
Other differences between London and the rest
Not only do costs differ between London and the rest, but average wages do too. These values are taken from “Changes in real earnings in the UK and London, 2002 to 2012” (Figure 1: Median hourly earnings excluding overtime of all employees, UK and London) published by the Office for National Statistics 2013.
- Results are for employees on adult rates of pay.
- London is shown for employees resident in London, and for employees working in London including people commuting from outside London.
Since this UK value includes the London groups, the UK value excluding the London groups is presumably somewhat lower. Once again, this graph reveals that London is a special case. (This graph does not take into account people without work).
Growth in output
Here is another major difference between London and the rest: Growth in output.
Even here, London is a special case, emphasising that analysis should represent London separately from the rest of the UK.
Sources used above
- Rentright Ltd
- BBC: UK house prices July to September 2012
- Oxford Economics - Housing Market Analysis July 2011
- ONS: Changes in real earnings in the UK and London, 2002 to 2012
On this blog
Other sources describing the “London versus the rest” divide
- Home Builders’ Federation: The Locked Out Generation: ‘Time to Save a Deposit for a Home Triples In a Decade’
- Telegraph: Two speed Britain – in graphs (step through the graphs)
- FT: London unites the world but splits the UK
- Mail Online: Lancashire is the cheapest place to buy a house in Britain: Deposit of £15,000 gets you on the property ladder (nearly FIVE times less than London)
- Castle Trust: Average homebuying deposit is nearly £26,500
- Independent: How big a deposit do you need to buy a house?
- This is Money: Potential first-time buyers face wait of more than eight years to save their £26k deposit
- MoneyMarketing: Average deposit for house purchase reaches £26,500
- Mail Online: Average London house ‘to cost £500,000 by 2020′: Welcomed by home owners but ‘grim news’ for first-time buyers
- BBC: Nick Clegg: UK economy needs ‘rebalancing’
- Independent: We’re too dependent on London and the city is to blame, warns Nick Clegg
- Mail Online: London’s economy grows at DOUBLE the rate of the UK since the financial crisis