Posh estate agents don't have a clue: shock

From The Metro:

Soaring rail fares could spell the end of the commuter town as price increases swallow up the benefits of cheaper housing, experts predict. Many workers could actually save money by living in the city – even though homes often cost far more, a new study reveals... Jonathan Haward, of County Homesearch, the agency behind the study, said: ‘With the government focused on extensive house building beyond the London green belt, the future availability of affordable family homes will only continue to conflict with the cost of travelling to and from them.’

Taking their numbers at face value, it currently costs £1,000 a month to rent/buy a house out in Colchester and £900 a for two monthly tickets into London, total £1,900. If you live in Greenwich, it currently costs you £1,700 + £200, total cost also £1,900.

If we take two jobs in London as the couple's fixed starting point - and ignore all other factors, as they do - then rents are quite simply a balancing figure of £1,900 minus the cost of two monthly tickets. So if season ticket prices from Colchester increase by £90 a month, rents will simply fall by £90 a month relative* to Greenwich and the balance is restored. People will still largely be indifferent between living in Greenwich and living in Colchester, so this will not sound the death knell for towns like Colchester.

* It might be that the extra ticket price just goes into higher profits (we don't know what the demand curve looks like) in which Colechester rents fall by £90 a month; it might also be that the extra ticket prices go into improving services, in which case Greenwich rents might increase by £45 a month and those in Colchester will only fall by £45, but that £700 gap will no doubt widen - unless of course, the new service from Colchester is improved so enormously that people are happy to pay the extra and there is no particular impact on rents.