The 90 second Urbs briefing on renting in London
Barking and Dagenham is the only borough in London with a ratio that is below the average for England. Across England the median house price is 7.49 times the salary for a full time job.
The ratio is calculated by the Department of Communities and Local Government using median house prices rather than the average to avoid distortion due to highs and lows. These are then compared to median wages locally.
According to this calculation the most affordable boroughs other than Barking and Dagenham are mostly in Outer London. The median house price is less than 10 times salary in Bexley, Havering, Croydon and Hounslow, and in the Inner London borough of Tower Hamlets.
The least affordable places are central and west London boroughs including Wandsworth, Richmond, Camden, Hammersmith and Fulham and Westminster. But at the top of the scale is Kensington and Chelsea, where the median house price was nearly 40 times the median salary in 2015.
Since the start of the century the ratio in the royal borough has gone up by 178%. And a similar dramatic change, from lower levels, has happened in Hackney and Waltham Forest, where the ratio has gone from around five times salary to 15 and 13 respectively since 2000.
The change from 2014 to 2015, the most recent years recorded, was highest in Redbridge where the ratio changed by 17% from a little over 10 times salary to just over 12.
In Kensington and Chelsea, the ratio actually fell by 6%, and in Westminster it came down by 1%.
|Median House Price to Earnings Ratio 2015|
|Kensington and Chelsea||39.67|
|Hammersmith and Fulham||22.33|
|Richmond upon Thames||18.07|
|City of London||17.11|
|Kingston upon Thames||13.83|
|Barking and Dagenham||7.19|
London has moved down from 12th to be 17th most expensive city to live and work as an expatriate in the annual rankings by HR and consulting company Mercer. But it is still the most expensive city in Europe with the exception of those in Switzerland – Zurich, Geneva and Bern are higher up the cost league.
Other UK cities have also become comparatively cheaper. Aberdeen has move down to 85 from 82 last year and Birmingham is 96th in 2016 compared to 80th in 2015. Mercer say that the strength of the pound against the dollar in the past 12 months has been a factor as dollars are used as the base currency for calculations.
The most expensive city in the world for an expat is Hong Kong, according to Mercer research. Last year’s most expensive city, Luanda, drops to second place. Five of the top ten are Asian cities, three of them in China.
|Mercer Cost of Living Survey 2016 – 10 most expensive|
|6||Kinshasa||Dem Republic of Congo||Africa|
In Europe, apart from the Swiss cities and London, the only cities in the top 50 globally are Copenhagen, Paris and Dublin.
|Mercer Cost of Living Survey 2016 – Europe’s most expensive|
The survey looks at the cost of 200 items in each city including housing, transport, food, clothing, household goods and entertainment. The cost of housing helped push Hong Kong to the top of the rankings, but London comes out as expensive for a number of everyday purchases.
The unemployment rate in London fell slightly in the last quarter but the city still has the second highest rate of joblessness in the UK at 5.9%. Behind this headline rate is a more complex picture of the jobs market in the capital.
The unemployment rate for the whole of the UK for January to March this year was 5%, the lowest level since 2005, according to the latest data from the Office for National Statistics. At 5.9% London has the second highest rate along with Yorkshire and Humberside and only the North East of England has a higher rate – 7.3%.
This means 280,000 people in London are without work. But only 85,000, of them are claiming Jobseeker’s Allowance, the benefit for the unemployed.
Despite having one of the highest unemployment rates, the benefit claimant rate is among the lowest in the country. Only the South East and the East of England have lower proportions of benefit claimants and these regions also have the lowest unemployment rates.
Yorkshire and Humberside has the same unemployment rate as London but 2.8% claiming benefits compared to 1.8% in the capital.
There are a number of reasons for the difference between unemployment and benefit claimants. Many of them will be common for the country, some of them may be more peculiar to London.
The most obvious difference between the two rates is who is included. The unemployment figures include all those able to work between the ages of 16 and 64 but those under 18 are, in most circumstances, excluded from claiming Jobseeker’s Allowance. In London this accounts for 9,000 people in the unemployed numbers.
Part time work is also a factor. People working more than 16 hours per week cannot claim Jobseeker’s Allowance. This may exclude people working in unpredictable and short term, part time jobs who may be unemployed for periods but not eligible for Jobseeker’s Allowance. People on zero-hours contracts may also be impacted by this.
The residence qualification may also be a factor, particularly in London. To claim Jobseeker’s Allowance a person must be resident in the UK for at least 3 months. London has a high number of young workers from the EU, particularly southern Europe. They would not be eligible to claim benefits when they first arrive to start seeking work.
The other key factor is the natural churn of the workforce. The unemployment figures include people who have found work but not yet started. A number who are between jobs will not go through the process of making a claim for benefits.
London is the leading place in the UK for job creation. Since December 55,000 new jobs have been created. Over the same period the number of people who are economically active and available for work has risen by 50,000.
The Bank of England and the Office for Budget Responsibility have a target rate of 5% for sustainable unemployment – the rate at which people who want a job have one and any lower rate may mean wage inflation.
London may be approaching ‘peak job’ but what may matter more to employers and employees are the quality of the jobs, the wages and the productivity.
The surge from the States helped make 2015 another record-breaking year for the capital as, predicted by Urbs. Data from Visit Britain shows that the capital welcomed 18.5 million people from around the world for leisure, education, business and family visits.
2.1 million of those visitors, or 11.5%, came from America, narrowly beating the French, although visitor numbers from France were also slightly up on 2014. Polish visitors pushed into the top 10 for the first time in 2015.
As well as being the largest group, Americans also spent the most. Of the £11.9 billion the city generated from tourism, nearly a tenth came from American wallets alone last year.
London’s highest spending European visitors were French, with a total spend of £762 million. But on an individual basis the big spenders are from the Gulf countries of the Middle East. While the average London visitor spent £640, those from Kuwait and Saudi Arabia spent nearly five times that amount.
The ease of a hop across the Channel or a trip through the Tunnel means the French still account for more of London’s short-stayers than anyone else. 1.2 million French people came to the city for ‘le weekend’ and a trip lasting one to three nights.
The longest stayers came from Australia – 1.57 million of them stuck around for at least two weeks following presumably long-haul journeys for most of them. Despite the Australian’s extended time here, they trail other countries closer to home on tourist numbers and expenditure, including Germany, Italy and Spain.
As home to most of the UK’s biggest tourist attractions, it is no surprise that London’s main draw for visitors continues to be as a holiday destination. Half of those who came to the city from abroad did so for leisure. Internationally, London also remains a popular destination to do business, with 20% of those coming here on work commitments.
Irish and Polish family networks around London also seem to have grown in strength in the past year. Not only did their visitor numbers increase by almost one third and one fifth respectively, but as many as 39% of Irish and Polish visitors were in the capital to see family and relatives.
The proportion of young people in work in London is at its highest rate for nearly a decade. Employment rates have been climbing steadily since the recession and annual figures from the ONS show that 457,000 16-24 year olds were in work in 2015.
Although London presents financial challenges for millennials who want to live and work here, the data from the Annual Population Survey reveals they are finding work at a better rate than at any time since 2006.
It has taken almost a decade for the employment rate of London’s young workforce to hit similar heights as 2006 when 47.4% of them had jobs. After a drop in youth employment rates following the financial crisis of 2008, the picture has gradually become brighter with 47.1% of the capital’s 16-24 year olds now working – a 3.8% increase from the previous year.
The rate of increase for young women in particular has been higher with 5% more in jobs than 2014.
The steady increase in youth employment over the past six years may have contributed to a drop in the proportion of 16-24 year olds who are NEET status (not in employment, education or training). In 2014, 5000 fewer young people were NEET throughout the capital compared to the previous year as the total number of youngsters with jobs increased by 17,400.
At the end of 2015 London had the lowest proportion of England’s 16-24 year olds who were NEET at 9.4%
The proportion of 16-24 year olds in work in the capital is below the national average of 53.5% but London has historically had a much higher rate of people of this age remaining in full-time education than other regions, keeping them out of the workforce.
The London jobs market has grown by 28% in 30 years. There are an estimated 5.3 million people working in London, up from 4.1 million in 1984. In that time London has seen a massive expansion in professional roles and the collapse of manufacturing.
In 1984 manufacturing accounted for 11% of the jobs in London and was the biggest sector of the workforce. By 2013 it was just 2% of the workforce, and had seen a fall in job numbers of 74%.
Meanwhile the expansion of the professional, scientific and technical sector has seen 500,000 new jobs created. This sector includes jobs in real estate and shows an overall growth of more than 150%. Construction in the same period grew by just 20%. There are, it would appear, more jobs in selling houses than building them.
Other big growth sectors underline the changing nature of the workplace. Information and communication roles grew by 85% while admin and support jobs more than doubled. Sectors that have shrunk include those covering the public sector, down by 21% and transport and storage, which has fallen by 13%.
These trends are forecast to continue over the next 20 years. In that time London will experience a 16% growth in the employment market creating nearly a million new jobs. This growth in employment to 6.4 million by 2036 will be driven by the professional sector, real estate and scientific and technical roles.
Demonstrating the shifting nature of work in the capital some sectors will see a decline. The reduction in manufacturing, will fall further, by 54%. That’s around 72,000 posts. Finance jobs are also forecast to shrink by around 9,000.
The figures come from the GLA’s Employment Projection for 2015 which forecasts that jobs growth will be concentrated in inner London. Tower Hamlets stands out with an estimated 74% employment growth, adding 200,000 new jobs. That’s nearly a quarter of all the new posts in London for the period.
But, as the map shows, many boroughs are predicted to show very low levels of job growth. And two, Croydon and Barking and Dagenham are expected to see a decline in employment, in line with current trends.
These trends take place against the backdrop of a very mixed picture for skills and wages across the capital.
The continuing boom in professional and technical jobs requires a highly qualified workforce. In general, London is well equipped to supply this, with better skills than the rest of the UK. Nearly half the working-age population has a degree-level or equivalent qualification.
The proportion of people educated and trained to this level (so-called level 4+) has been rising over recent years and remains consistently above the UK average.
Data from the Annual Population Survey from the Office for National Statistics shows London reached 49% with level 4+ qualifications by the end of 2014.
However, this qualifications map varies across the capital. 9 boroughs in the centre and South West have more than 60% of the workforce with qualifications at level 4+. These include Wandsworth, Camden, Hammersmith and Fulham, Kensington and Chelsea, Westminster, City of London, Richmond and Lambeth. However Havering, Barking and Dagenham, and Bexley have levels below the national average and half the level of the best-qualified boroughs.
Conversely, these boroughs have high numbers with no qualifications. In Barking & Dagenham it is twice the national average
From qualifications flow wage levels. Full time pay in London is, not surprisingly, the highest in the UK at £16.61 per hour compared to £13.36. However, if you live in Newham or Barking and Dagenham you are likely to earn less than the national average. The hourly full time median rate is Newham is £12.90, yet across the river in Greenwich it is £3 higher.
This pattern is repeated among part time workers. A quarter of London jobs are part time, and average pay plummets from the £16.61 for full time posts to just £9.22. Again, for part time workers in East London boroughs many are earning below the national average. Workers in Newham are earning less than any of the UK’s regions, including the North East, despite far higher living costs.
The current Mayor has been an advocate of the London Living Wage, a voluntary pay level currently set at £9.40 and not to be confused with the Government’s recently introduced National Living Wage for over 25s of £7.20 per hour.
Data from the most recent ONS Annual Survey on Hours and Earnings revealed that more than three quarters of a million jobs in the capital were paying below the London Living Wage. Women and the Under 24s are more likely to be in jobs that pay below the LLW, and many are in the sectors that are growing rapidly – food and accommodation, social care and cleaning.
10% of Londoners were still earning less than the National Minimum Wage, rising to 21% in Newham.
When it comes to the economy and employment the new Mayor will be dealing with two Londons. At one end of the scale, a growth in highly skilled, well paid professional jobs placing pressures on the availability and cost of housing. At the other end of the scale, a low skill, low pay workforce struggling to afford to live in the city.
This report was produced in association with London Live’s special election programme, London Votes.
As part of its annual prices and earnings survey UBS looked at the cost of getting around a city. In order to get a like-for-like comparison the company took the cost of a single ticket on an underground system, bus or tram for a journey of 10 kilometres or 10 stops.
Urbs Media looked at the data paying particular attention to 20 cities with strong connections to London or those in countries that had significant migrant populations living and working in the UK. (See the table below).
Copenhagen is the most expensive for public transport, followed by its Swedish neighbour, Stockholm, and then London. New York and Paris are both cheaper, but people who have moved to the capital from Warsaw, Bucharest, or New Delhi will notice a big price difference. Kiev has the cheapest public transport of any city surveyed.
The results do not take account of the lower prices for season tickets, which would reduce the cost in London and in other cities too. Nor does it factor in the quality or reliability of the service.
|City||Public Transport ($US)||Taxi fare ($US)|
London comes out a little better for the cost of taking a taxi. Looking at the price of a 5 kilometre cab ride within the city, New Delhi offers the cheapest option. London is more expensive than Hong Kong, Bucharest and Warsaw, but cheaper than Sydney, New York, Paris, Rome, Madrid or Berlin. But none compare to the astronomical cost of a cab ride in Oslo – three times the price of London.
UBS conducted the survey in March and April 2015. It has carried out the price and earning survey annually since 1971.
London enjoys a reputation as a dynamic home to business start-ups, particularly in the technology sector. But while the city may be leading Europe it accounts for just 2% of global capital investment funding.
Data gathered by the Martin Prosperity Institute at the University of Toronto’s School of Management shows that the start-up sector was powered by $42 billion of venture capital investment in 2012 – the most recent available data. London attracted $842 million.
While venture capital investment is becoming more global, the sector is still dominated by the US with cities and metro areas on both the East and West coasts attracting 70% of funding. The San Francisco Bay area, which includes Silicon Valley, attracts a larger proportion than either Europe or Asia.
Amid this US dominance, London is ranked 7th in the list of venture capital investment put together by the Instiitute. Beijing is the only other non-US city in the top 10.
Venture Capital Investment
(US millon dollars)
London fares quite well in these rankings because it is a large and dynamic city. The growing mega cities of China and India have a similar advantage. But London fares less well when investment is considered on a per capita basis. London then slips to 39th in the global rankings with around $60 per head. In San Jose it is more that $2,000 and many smaller US cities jump into the top 20.
London also falls behind some other UK and European cities in the par capita calculations. Edinburgh, Bristol and Liverpool have all succeeded in attracting more venture capital per head of population. But their populations and total investments are a fraction of size of London.
The UK capital still dominates Europe for total investment with Paris trailing in second with $449 million. While there is a greater global spread of money the bulk is still concentrated on large urban centres, and that will continue to be to London’s advantage.
The creative industries are growing at twice the rate of the wider UK economy and that’s very good news for London which is the heartland of the sector.
Latest government figures show that the UK’s creative industries grew by 8.9% in 2014, the strongest performance of any sector. They are now worth £84.1 billion a year to the economy.
The creative industries were defined by the government at the start of the century as those based upon individual creativity, skill and talent that have the potential to create jobs and wealth through the exploitation of intellectual property.
If that all sounds a bit technical it boils down to things like the music, film, TV, video games, visual arts and the fashion industry. It also includes architecture, craft and design companies. But the biggest part is IT, software and computer services.
There were 1.8 million jobs in the creative industries in the UK in 2014, when they were last counted, and most of them were in London. The last few years has also seen a substantial rate of growth in the East and West Midlands, the South West and the North East.
The creative industries account for 11.8% of the jobs in the London economy, a much higher proportion than any other regions. So, the continued success of this sector is particularly vital for the capital.