Data from leading flatshare site SpareRoom reveals that London is now entirely unaffordable to graduates, with every postcode in the Capital a ‘no-grad zone’ thanks to sky-high rents.
September sees many new grads flock to London, enticed by the prospect of career opportunities and quicker advancement up the professional ladder. However, average room rents in London & surrounds are at a record high, reaching a staggering £1,013 in August 2023.
According to SpareRoom’s latest Quarterly Rental Index, not one postcode in the Capital has average room rents that are ‘affordable’ on the average London graduate salary of £29,000 (equating to a monthly take-home of £1,932 after tax). This is based on traditional affordability standards, which state rent shouldn’t cost more than 30% of your income. Rocketing rents and an ongoing cost-of-living crisis have now rendered this 30% benchmark unrealistic, with the majority of Londoners spending in excess of 30% of their salary on rent.
The cheapest postcodes for graduates wishing to move to the Capital are E12 (Manor Park) at £714, SE28 (Thamesmead) at £741 and E7 (Forest Gate) at £753, where young professionals can expect to spend 37%, 38% and 39% of their salary on rent respectively.
SpareRoom has compiled a list of more affordable major UK cities, based on the average graduate salary in each city vs average room rent in the city:
1. Liverpool (£503) = 29% of average graduate salary (£25,000)
2. Sheffield (£504) = 29% of average graduate salary (£25,000)
3. Belfast (£539) = 20% of average graduate salary (£42,000)
4. Glasgow (£643) = 30% of average graduate salary (£32,500)
5. Birmingham (£516) = 28% of average graduate salary (£27,000)
6. Leicester (£530) = 30% of average graduate salary (£25,000)
7. Newcastle upon Tyne (£545) = 31% of average graduate salary (£25,000)
8. Leeds (£567) = 32% of average graduate salary (£25,000)
Average salaries found on https://www.totaljobs.com
Matt Hutchinson, SpareRoom director, comments: “For decades, London has been a key destination for graduates leaving university, heading to the Capital in pursuit of job opportunities and, of course, everything else the city has to offer.
“But rocketing rents and an ongoing cost of living crisis means very little of London is affordable on an entry-level salary, and prospective graduates may now be priced out.
“With many businesses traditionally based in London relocating to other cities, and remote working becoming far more common, the Capital is likely to dominate the graduate job market far less in years to come.”