LloydsSep 26 2016

Commuting could save £450k on house price

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Commuting could save £450k on house price

London workers could save almost £450,000 on the cost of a home if they are willing to commute an hour each way, according to the latest research by Lloyds Bank

Average house prices drop by 60 per cent from £741,919 in central London to £294,903 in commuter towns an hour outside of London, the lender’s research revealed.

Towns which are an hour’s commute from central London, such as Wellingborough, Southend, Sittingbourne and Rugby, have an average house price of £294,903: compared to the average of £741,919 for a property close to their place of work in central London (zones one and two).

This is equivalent to an average saving of £447,015 – or 60 per cent - on property prices.

Even when taking into account the annual rail cost for a one hour daily commute each way (£4,989), a commuter would have to make the same journey for 89 years for the total rail costs to wipe out the benefit in house prices.

the decision of whether to live in the city or further away is not simply a trade-off between financial costs and journey times.Andrew Mason

Closer to the capital, commuters who live approximately 40 minutes outside of central London, including Hatfield, Billericay, Orpington and Reading, could save 48 per cent (£353,000) outside of the city, with their average house price £389,000 and with a lower average annual rail pass cost at £3,534.

However, this is not the case in Manchester and Birmingham, where Lloyds Bank calculated it is cheaper to live in the city than outside.

Andrew Mason, mortgage products director of Lloyds Bank, said: “Commuters to London who don’t mind a longer journey between home and work could reap the financial benefits of living outside of the capital.

“However the decision of whether to live in the city or further away is not simply a trade-off between financial costs and journey times.

“Quality of life is also a major factor: family circumstances, better schools, physical environment and homes that offer better value for money also come into the equation. “That explains why, especially outside London, commuters are often prepared to pay a premium to commute when they could be better off in purely financial terms living closer to their place of work.”