Feb 112013
 

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).

London versus rest 01

Buying and renting costs, London versus next biggest cities

The heights of the columns are relative to London’s, which are therefore 100%.

Deposit needed

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).


Not shown in this graph: the percentage is falling faster in London than elsewhere. In the North East the percentage is rising slightly.


Other differences between London and the rest

Wages

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.

London versus rest 04

  • 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.

Growth in Output

Even here, London is a special case, emphasising that analysis should represent London separately from the rest of the UK.


Further reading

Sources used above
On this blog
Other sources describing the “London versus the rest” divide

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