"Renting must remain a viable option for those looking to move home, but residents might want to consider a buying market that offers plenty of incentives for first-timers"
New research from Barratt London ranks the capital just behind San Francisco as one of the most expensive cities in which to rent. Based on the average salary and the average rental prices, Londoners are spending 45% of their wage on rent, compared to 47% for those living in San Francisco. London is closely followed by Hong Kong (44%) and Tokyo (42%).
With the average price of a one-bedroom apartment in London reaching £1,250 pm, the UK’s capital ranks below the rental prices of New York ($4,225/£2,532) and Sydney (AU$2,600/£1,558). New Yorkers are spending 40% of their wage on rent, while Sydney residents spend just 28%.
The research reveals Prague and Cape Town are the cities most relative in respect to income and rental prices, with wage to rent ratios of 21% and 23% respectively. Dublin, where rents average at under £950, requires just 25% of its tenant’s salaries.
A spokesperson for Barratt London said: “Rental prices in London continue to demand too much of the occupier, to the extent of almost half of their monthly pay cheque. Renting must remain a viable option for those looking to move home, but residents might want to consider a buying market that offers plenty of incentives for first-timers. The London Help to Buy scheme, for example, is helping first-time buyers get on the property ladder more affordably, with just a 5% deposit and an equity loan that is interest-free for the first five years.”
Despite high rental prices, London’s home ownership rate (38%) falls well below other cities around the world. In Singapore, where rent demands 40% of average salaries, more than 90% of people own their own home. In Rome, where the wage to rent ratio is the same, home ownership is at 73%.
