Coping with London’s Property Prices

Young Londoners do not have to despair about sky-high property prices and simply resign themselves to a lifetime of renting. Instead they can take the initiative by looking for property outside the city.

A recent study by estate agents Savills showed that workers in the capital could save more than £3,000 on house prices for every extra minute they were willing to travel on their daily commute.

David Gape, an estate agent at Independent London Estate Agents, believes that looking outside the capital is the only option not that the average cost of a home in the capital has risen by more than £200,000 in the past decade to reach £620,000, more than twice the national average of £295,000.

“If your earning £30,000 to £40,000 a year and paying £1,000 a month in rent, and tax, and national insurance, and clothes, and socialising, and phone bills, and gas, and electric, you’re not taking off are you, in fact you’re probably smashing your credit cards out,” he says. “So, I would say, look to invest in other property markets in order to fulfil your dreams long term, because nothing will happen for you short-term unless you’re earning megabucks in the city with the rest of the kids off the country estates.”

For first-time buyers, homes in London now stand at around 20, 30 or in some cases even 40 times their salary. The 45% jump in London house prices since 2007 co
mes as a crushing blow for youngsters’ hopes of grabbing a property in central London. Research shows that by living just an hour outside the capital, city workers can save £300,000 after 30 years of work, even after travel expenses.

Areas within an hour of the capital –  such as Crawley, Colchester and Peterborough – boast prices of around £272,000 on average, with travel fees coming in just shy of £5,000 per annum adding up to £150,000 over 30 years of commuting. Properties in nearby Reading or Stevenage come in at around the £349,000 price tag, with homes in Wimbledon, East Croydon and St Albans still significantly below central London prices.

For Daniel Smith, aged 25, leaving the capital was the only way to save up for his dream first house. “We only lived in London for two weeks or so, it was too hectic, too confined and too expensive. Slough is cheaper, near to the countryside and has good road connections,” he said. “Yes, we are trying to save. We aren’t trying to stop ourselves doing things but want to make sure to save £500 a month or so if we can.”

It is crucial for youngsters to have some sort of strategy for how long they plan to rent and save before buying but it is a
lso smart not to jump in too quickly and make commitments they may come to regret.

The real estate agent David Gape suggests that a period of renting or house sharing can be used to clarify long-term plans while saving up for a deposit. “There is no point coming to London and living like a hermit,” he says. “You need to find your feet then go out dancing, make some friends, live a little before you take stock. Rent when you first arrive and make sure you find a part of London that you love. House sharing is great for people arriving and rooms are readily available.”

 

by Luke Chillingsworth

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