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Chart of the Day: London, a stupid place to rent a home

But unfortunately the difficult housing market means many people don't have much choice.

 

by Chris Marshall on Nov 29, 2011 at 10:21

This chart from the Office for National Statistics (ONS) shows the huge difference in the cost of renting in London compared with the rest of the UK.

Chart 1: Percentage difference compared with UK average for net rent by UK countries and regions, 2010 (source: ONS)

Now compare that with the regional variation in mortgage payments and you can see that the 'London effect' isn’t so stark: the madness isn’t just constrained to the capital, but the east and south east as well.

Chart 2: Percentage difference compared with UK average for mortgage payments by UK countries and regions, 2010 (source ONS)

What explains this difference between regional rent and mortgage payments? Is it just a reflection of a much higher demand for rental property in London?

4 comments so far. Why not have your say?

D G Stonebanks

Nov 29, 2011 at 12:00

So what is the average rent and what is the average mortgage payment for 95% mortgage?

What we really want is average rent in £ for each region and average mortgage in £ for each region, and then rental/mortgage for each region.

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David Evershed

Nov 29, 2011 at 12:20

Why buy in London when house prices are going to fall?

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Mike

Nov 29, 2011 at 17:42

There has not been any overall fall in prices where I live in London in the last 3-4 years nor any sign of it happening any time soon despite sky high prices.

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michaelgbrown

Nov 30, 2011 at 09:57

I would explain it by saying the average price of a property in London is way above the 30% difference in mortgage payments (over 200%). This means hardly anyone is actually buying a house in London with a e.g 90% mortgage. Most of the owners bought before 2000 and therefore only low mortgages as a percentage of the market value. FTB can't afford the prices so they rent (which is astronomically expensive but still cheaper than buying).

Then when they get a bit older they buy a house outside London where lack of supply also pushes up house prices giving the high mortgage payments you see in the south east.

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