By Daniel Hunter

Rail commuters to London are typically financially much better off catching the train, rather than living close to their place of work, according to new research by Lloyds TSB.

Many commuters in the south east may make a 60 minute train journey — with an average annual rail cost of £3,800 — but they benefit from a house price that is, on average, £308,000 (55%) lower than living close to their place of work in central London. Moreover, homebuyers can get more for their money outside central London due to the lower price of property per square metre outside the capital.

House prices in a selection of towns about an hours train journey away from the capital (including Newbury, Crawley, Bracknell Forest and Maidstone) are, on average, around £247,000; that is £308,000 lower than the average of £555,000 for a property in an area within travelcard zones 1 and 2. In comparison, the average annual rail cost from these areas is £3,800, which means a commuter would need to commute for 81 years for the total rail costs to wipe out the difference in house prices.

Half an hour closer and house prices are higher, but not substantially so. Commuters from towns in the ‘half hour zone’ will have to pay an average house price of £272,000: still some £283,000 lower than in zones 1 and 2. These also come with a lower average annual rail pass cost of £2,800. Such towns include Hemel Hempstead, Stevenage, Sidcup and Redhill.

Even commuters whose journey is just 15 minutes from central London — such as those living in Borehamwood or East Croydon — benefit from an average house price that is significantly lower (nearly £212,000) than in the central zones of the capital.

Clearly, where the differential in house prices is large, the purely financial benefit from commuting by rail is not likely to be outweighed by the costs of travelling even if the commuter takes the train for many years.

Even compared to average house prices in zones 3 to 6, a longer commute is still financially beneficial.

There is also a significant difference in property values in commuter towns surrounding London compared to the average house price in zones 3 to 6 of £355,000. Commuters in towns 30 minutes away have an average house price that is over £80,000 lower than the average in zones 3 to 6; and prices in towns an hour away diverge by an average of £108,000.

Commuters coming into London from Essex and Kent enjoy some of the largest financial benefits

Commuters from Basildon benefit from an average house price of £170,586, which is £385,000 (or 226%) lower than the average in zones 1 and 2, but with a rail journey of only 30 minutes. Other commuters from Essex with a shorter journey time generally experience higher house prices than in Basildon. For example, commuters from Ilford (15 minutes journey time) face an average house price of £263,304 — but this is still over £290,000 lower than in central London.

Kent commuters also benefit from lower house prices than living closer to their place of work. For example, in Sidcup — 33 minutes away from central London — the average house price is £249,838 (over £305,000 lower than zones 1 and 2); a further 30 minutes down the line in Sittingbourne, the average price falls to £178,156 (£377,000 lower). The trade-off for lower house prices is the higher cost of travel; the annual season ticket price of £3,724 for commuters from Sittingbourne is close to two and a half times the amount paid by those in Sidcup (£1,516).

Reading the most popular station for commuters outside London

With an average of 2.35 million commuters in 2010/11, Reading is the most popular station outside London for commuters into the capital. With a journey time of around 30 minutes, commuters benefit from an average house price of £283,501 that is half the average for zones 1 and 2. Chelmsford with the next highest number of commuters (2.2 million) has an average property value of £248,986; over £300,000 lower than the average for zones 1 and 2.

Amongst the 10 most popular commuter stations, Guildford (with over 1.32 million season ticket users in 2010/11) is the most expensive town with an average house price of £400,674. St. Albans (1.57 million commuters and an average price of £378,937) and Woking (1.63 million commuters and an average house price of £365,236) are the next most expensive.

But commuters to some of our other major cities often pay more for a house than they would to live in the city

For commuters to Britain’s second and third largest cities, house prices are often higher outside the city. The average house price in Birmingham is around £150,000, whereas Solihull, just 15 minutes rail journey away from central Birmingham, has an average price that is around 60% higher at £242,231. Similarly, Leamington Spa, which is 30 minutes from the city centre, has a significantly higher average house price, at £240,760.

The same applies to Manchester, where an average house in the city of £140,543 is lower than in Stockport (£184,860 and 15 minutes away) or Macclesfield (£223,308), Warrington (£167,290) and Chorley (£157,294) — all half an hour from the city.

On the other hand, average house prices in Leeds (£163,374), Newcastle (£162,145) or Sheffield (£151,809) are generally higher than in towns within commuting distance, although there are exceptions. For example, the average property price in York of £218,330 is a third higher than in Leeds. In Stocksfield average housing values are almost double those in Newcastle, at £272,015.

"Distance from work is often the deciding factor for purchasing a home. It is generally true that the further you commute, the larger are the financial savings made in terms of lower house prices," Suren Thiru, Lloyds TSB Housing Economist, said.

"A major consideration for commuting to London is that the typically higher income that can be earned, tends to go much further in towns outside the capital. In addition, bigger homes can be bought for lower prices."

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