London is now unaffordable to graduates – every postcode is a ‘no-grad zone’

London is now unaffordable to graduates, with every postcode in the capital a ‘no-grad zone’ thanks to sky-high rents, new data reveals.

The average room rent in London and surrounding areas was at a record high of £1,013 in August.

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, or £1,932 per month after tax.

This is based on traditional affordability standards that rent shouldn’t cost more than 30% of income.

‘London has been a key destination for graduates’

SpareRoom director Matt Hutchinson said: “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.”

He added: “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.”

Fast-rising rents and an ongoing cost-of-living crisis

The data shows that fast-rising rents and an ongoing cost-of-living crisis have now rendered the traditional 30% benchmark unrealistic, with most Londoners spending more than 30% of their salary on rent.

The cheapest postcodes for graduates moving 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 UK cities, based on the average graduate salary in each city vs average room rent in the city:

• Liverpool (£503) = 29% of average graduate salary (£25,000)
• Sheffield (£504) = 29% of average graduate salary (£25,000)
• Belfast (£539) = 20% of average graduate salary (£42,000)
• Glasgow (£643) = 30% of average graduate salary (£32,500)
• Birmingham (£516) = 28% of average graduate salary (£27,000)
• Leicester (£530) = 30% of average graduate salary (£25,000)
• Newcastle upon Tyne (£545) = 31% of average graduate salary (£25,000)
• Leeds (£567) = 32% of average graduate salary (£25,000).

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