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7 Feb 2017
5 Reasons why it’s Time to Leave London
1. Affordable housing
From 2004 – 2016, the average wage has increased 27.92% from £22,056 – £28,213. However, for the same period, average house prices rose from £138,000 – £234,000, an astonishing +70%1.
For many people in today’s economy, saving up for a house deposit and securing a reasonable mortgage seems a long way off.
The situation is even more dire for those working and living below the Watford Gap
When comparing the average house prices of southern cities with northern cities, it becomes very obvious that one is more likely to find affordable housing in the North. Unsurprisingly, London is the most inflated city of all. In fact average house prices in London are more than 3 times the average house prices in Manchester, Leeds and Birmingham (see Figure 1)2.
For women and families in particular, London is becoming more and more unaffordable and impractical. House prices are growing faster than pay rises which is therefore pushing up the average age when women have children in London. In fact, nowadays 63% of women residing in London wait until they are at least 30 until they have children, a significantly higher figure than in any other part of the country. This isn’t helped by the fact that salaries in the 22-29 age bracket have risen the least out of all the other age demographics. Moreover, because house prices have increased in London more rapidly than in any other part of the country over the past 20 years, families have to save a lot longer if they want to buy a house in the capital
2. Cost of living
Many people argue that the high cost of living in London is counteracted by higher wages. Maybe this was true once, but we have already discussed how wages aren’t rising as quickly as the property market.
Similarly, low house prices in the North doesn’t really mean anything if the average wage in the same region is considerably less.
So how does London really compare to the North?
Examining Figure 2, at £674.30 per week, the average London wage is much greater than any of the northern cities listed. However, the jump from average wage to average rent is far greater in London than any of the northern cities listed. In fact, as Figure 3 conveys, a person living in London earning the average wage
and paying the average rent would then only have £194.86 left over to cover, bills, food, childcare etc. It’s no wonder the majority of single professionals have to house share.
In comparison, a Northern resident earning the average wage and paying the average rent for their respective city gets to retain at least £878 to cover food, bills, childcare and more importantly, to save for a house.
3. Law firms in the North
Legislation reforms and post-recession cost-cutting has meant that businesses are increasingly squeezing the margins they spend with their suppliers. Ultimately, clients want more for less from their law firms. Due to this, many top law firms have since moved aspects of their business to cheaper locations.
The UK’s Top 30 Law firms have a heavy presence up north. Manchester alone is home to a third of them, followed by Birmingham and Leeds each with 8. They also have a strong presence in Scotland with Edinburgh and Glasgow each having 6 (see Figure 4).
Outside of Greater London, Manchester is top of the list when it comes to the widest representation of Top 100 UK Law Firms, containing 42 firms of the top 100 firms5. Birmingham and Leeds have 28 and 24 respectively5.
In regards to fee learners, disregarding Greater London, Manchester again tops the list for the number of fee earners with 2,0385. Birmingham and Bristol have 1,831 and 1,546 respectively5.
In fact, second to Greater London, Greater Manchester has the most Solicitors (8,670) and the most law firms (1,406)13.
4. Northern Powerhouse
The Northern Powerhouse is a strategy concocted by the 2010-2015 coalition government. It aims to rebalance the UK economy away from a dominating London, with more funding being channelled in to the Northern cities in a bid to create a united ‘Northern Powerhouse’ which can stand alongside London. With investors voicing solid support for the proposed agenda and foreign investors rebalancing economic activity regionally, it now seems devolution is beginning to take effect.
According to the EY UK Attractiveness survey 2016, the UK made a 79% increase and a 58% increase in projects from China and India respectively. There were also increases in key strategic investments, manufacturing, financial/business services growth and Investment from the EEA (European Economic Strategy)7.
Brexit has caused a lot of uncertainty about what it means for UK businesses. However, since Brexit businesses have continued to grow and the impact has been minimal. In Q3 2016, GDP growth was higher than in Q3 201514.
5. North West
“Business leaders and politicians have welcomed a newly-allocated cash injection of £556m for the government’s Northern Powerhouse project”8.
It certainly appears that the Northern Powerhouse is focusing on the North West with Manchester taking £130.1m and Liverpool taking £72m of the allocated £556m. This means that Manchester will receive 23% of the allocated fund and Liverpool 13% (Figure 6)8. In 2016, the North West grew more than any other region, with a 118% increase in foreign investment projects (Figure 5)7.
If you would like further knowledge about a specific place in the UK, we have lots of free resources which we can send you, so just shoot over an email to firstname.lastname@example.org and I will get back to you with the information as soon as possible.
MIDAS – CBRE UK Research Team http://www.investinmanchester.com/
MIDAS – Andrew Toolan http://www.investinmanchester.com/services/networks/financial-professional-services/
Irwin Mitchell. January 2017 City Growth Tracker Report.