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An hour’s commute could save £450k on the price of a home

Paloma Kubiak
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Paloma Kubiak

London workers could save themselves almost £450,000 on the cost of a home if they live an hour away and commute in, new research suggests.

Towns such as Wellingborough, Southend, Sittingbourne and Rugby – an hour’s commute from central London – have an average house price of £295,000, compared with the £742,000 price tag for properties in zones one and two. That’s a 60% saving.

Even when taking into account the cost of annual rail fares (£5,000), a commuter would need to make the same hour’s return journey every day for 89 years to wipe out the £447,000 saving of moving further afield, according to research from Lloyds Bank.

Even 20 and 40-minutes away could save you big money

For those who live closer to the capital with a 40-minute commute, such as places like Hatfield, Billericay, Orpington and Reading, they could save £353,000 or 48% as the average house price stands at £389,000. The average annual rail pass is £3,500.

And people with a slightly healthier budget, even moving out 20 minutes from central London could make it more cost effective as properties in towns such as Ilford, and Elstree and Borehamwood are nearly £298,000 lower.

The most affordable commuter town for London is Wellingborough in Northamptonshire, where the average house price (£183,000) is 4.1 times the average annual earnings for zones one and two (£45,000).

But commuters from Beaconsfield actually pay a higher average house price than in central London, at £996,000, in addition to the average annual rail cost of £3,300.

Birmingham and Manchester buck the commuter house price trend

Away from London and the South East, house prices are often higher outside of the city than in central areas.

The average house price in Birmingham is around £172,000, but several towns around 40 minutes’ rail journey away – including Derby, Coventry, Burton on Trent and Leamington Spa – command higher average house prices of £212,000.

Commuters from these towns also have to pay more than £2,000 on average for an 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 (£204,000) than in Britain’s third largest city (£162,000).

Financial costs vs quality of life

Andrew Mason, Lloyds Bank mortgage products director, 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.”

He said this could explain 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.