The big divide
North, south, east, west – grab your compass folks, it turns out that might be your most valuable tool in figuring out where your next pad may be.
That London has a world famous river is hardly news, but what is less immediately apparent is the impact that river may have on rental values. Now obviously, the closer you are to the water the more you can expect to pay – with our previous analysis suggesting that river views can attract a premium of as much as 10-15%. But who would have thought that it would matter just as much which side of the river you choose?
As it turns out, however, it does matter and London can be split up in the three following ways:
The North/South divide:
Properties on the north bank of the river are considerably more expensive than the south bank – presumably a result of proximity to the city centre and west end. The postcode districts in inner London that border the north bank of the Thames average £3,000 pcm equating to an earnings requirement of £121,000 pa. In contrast, the districts forming the river’s southern bank average £1,700pcm, a discount of over 40% compared with the north. As a result, combined earnings equate to £68,000pa.
Additionally, there is a long standing east/west divide. While this isn’t carved up by a body of water, it is just as real with adages like “west is best” coming into question in recent years as the east of London expands. However, despite the new vibrancy touted by the east, as you move further out of the city centre rental values typically still remain higher in the west, such as in parts of Richmond and Brent. This reflects the desirability of the areas; either through long standing appeal, in the case of Richmond, or because of recent regeneration in Brent. As a result, the average salary requirement is generally over £60,000. In contrast, values are not as robust in east London, with Greenwich Peninsula, Stratford and Wapping effectively marking the eastern value boundary. Values then recede across Newham, Greenwich and beyond. As a result, a large swathe of east London remains highly affordable in comparison with the west with the required average salary typically in the £40,000 - £50,000 bracket, with some areas requiring less than £40,000
Zone by Zone pricing:
And finally we have the zones – essentially this relates to travel times. Average rents fall by a dramatic 42% from Zone 1 to Zone 2. As a result, the average salary requirement is approximately £56,950 lower in Zone 2 compared with Zone 1. However, the rental decrease is less pronounced when moving from Zone 2 to 3 to 4, with rents falling by about a fifth between each zone.
In zones 4+ the average London salary more than covers the requirement of just over £48,000pa. This incorporates the area’s most affordable district of DA16 in Bexley; the average rent of £850pcm can be afforded on £34,000pa. The most expensive district in Zone 4 is TW10 which covers the area surrounding Richmond Park. Here London’s combined salary falls short by approximately £8,400 per year
Who would have thought the compass app on your smartphone would come in so handy?