Emailed in by Lola from The Telegraph:
Commuters who spend an hour-long train journey into London are saving around £380,000 on their average house price compared with the cost of living in the heart of the capital, research has found.
Lloyds Bank said that homes within a selection of commuter belt areas which are about a 60 minute commute by train, including Crawley, Windsor, Brighton, Rochester, Peterborough and Oxford, typically cost £260,000, which is £381,000 lower than the average price tag for a property within zones one and two in London, at £641,000.
With the average annual rail cost from these areas currently at just below £5,000, it would take someone 76 years of commuting to wipe out the difference in house prices, if property values and rail costs remained at the same levels.
OK, so a 25 year repayment mortgage @ 6% interest costs £5.92 per £1,000 per month.
380 x £5.92 x 12 = £27,000 mortgage saving
Deduct £5,000 for season ticket = £22,000.
Assuming that the additional commute time per person is 3 hours per day (half an hour to/from the station and one hour each way on the train), an average commuter loses 235 x 3 hours a year = 705 hours.
£22,000 divided by 705 hours = £31 an hour, which seems like a lot. If it's two commuters sharing a house and both commuting to London, the value they are placing on their own time is £16, which is more in line other calculations I've done on the basis of price v commute time comparisons pumped out by estate agents.
The other way of guesstimating it is to assume that Crawley or Windsor are the starting points and that if people work locally, they can earn £20,000 a year after tax for 2,000 hours a year commute-plus-work time = £10 net per hour. If they can earn £30,000 a year after tax in London for 2,350 commute-plus-work time, that's £12.80, so a slightly better deal (which is why so many people do it).
Personally, I'd rather have the extra 235 hours a year free time.
Forbidden Bible Verses — Genesis 42:18-28
3 hours ago
8 comments:
«the additional commute time per person is 3 hours per day (half an hour to/from the station and one hour each way on the train),»
That's phenomenally optimistic to say the least. I have a similar commute (not with London) and getting to the station and waiting and costs me at least 20-30 minutes at each end.
Also, using as basis the *current* values of houses is unrealistic, because of two reasons:
* Most commuters bought their houses 10-20 years ago, when completely tradeoffs were involved.
* You have to include in the calculation the expected tax-free capital gain, which is part of the package deal.
«assume that Crawley or Windsor are the starting points and that if people work locally, they can earn £20,000 a year [ ... ] If they can earn £30,000 a year after tax in London»
I doubt very much that most commuters are on £20k-£30k income band. They are far more likely on the £40k-£80k income bands.
Or else they are young and single or childless, so they don't have to pay for childminding.
But young and single tend to live in London themselves, sharing flags where every little cupboard has been turned into a bedroom, and paying 70% of their salary for rent, because living in London is their best hope to get laid. For young and single people living in a commuter town is social death (so excepted Oxford and Brighton).
Blissex, yes, agreed to your points.
Which make the calculations all far more complex and subject to wider margin of error.
I've done some long commutes and it's horrible. I now restrict myself to 45 minutes or do 1 day in the office, 4 days at home.
Me and my wife both commute from Rochester having moved from London two years ago. Our reasons were definitely more than a time/cost calculation. We just refused to buy in to London prices and the stress of a huge mortgage. Once we have saved enough to feel a bit more secure we will either move back to London and rent or find jobs outside London. Even renting we were more than £1000 better off per month outside London all in.
I would hate a regular commute on public transport. I made a decision years ago to sort out a way of making a living and live not more than about 15 minutes from work. My current commute by car from my home in the countryside to my office in the local town can be achieved in 15 minutes - depending on time of day. But, I earn less than if I did the same job in London. But, at the same time, my housing costs are spectacularly less.
Furthermore, we do quite a bit of business in London. I can be in Liverpool Street from my office in about 1 hr 20 mins, and as I travel mostly off peak it is (a) cheap and (b) I can work on the train.
I reckon I have it as about efficient as I can get it.
«Me and my wife both commute from Rochester having moved from London two years ago. Our reasons were definitely more than a time/cost calculation. We just refused to buy in to London prices and the stress of a huge mortgage.»
Your situation seems unusual to me because both you and your wife endure a long distance commute.
The commute situation seems to be far more commonly "gendered" where the husband is privileged to enjoy the stress of a 1-2 hour commute each way to get a higher paying, longer hours job to cover the cost of the mortgage (and often cleaner and gardener) for a larger house in a nice village, and the wife has to sacrifice herself with a lifestyle based around that larger nicer house with a nice garden (and ideally near to a Waitrose!) sometimes having to endure 15 minute commutes for getting a local job; plus the wife often gets to suffer the burden of getting sole ownership of a fully paid big house with garden in a nice village and managing the huge tax free capital gains it has accrued, when her husband dies many years before she does, or she divorces him for being abusive by neglecting her and her children by spending too much time commuting and working.
Well Blissex, it is unusual in that we both commute, but I actively want to avoid the situations you describe by us both contributing to the paid off mortgage, and by both of us contributing to family life equally as well.
Harsh it might be, but I doubt I'd be supportive of my wife "sacrificing her career" in the same way she would unlikely be supportive of me "sacrificing" mine...
Personally I wouldn't live anywhere near the stinking heap. Each to his own though :)
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