HomeSavingsWhy is South Wales such a good place to F.I.R.E ?
Why is South Wales such a good place to F.I.R.E ?
7th February 2020
So, you want to F.I.R.E- is South Wales a good location to pick? Well, if you know about F.I.R.E you know its all about savings rates. So- you need to both high earnings- but also low spending/outgoing. If it was all about earnings- then London, or Dubai etc that would be where all the F.I.R.E people would be living. But, its not all about earnings though- property in London is the highest in the whole of the UK- so ……
You need to go for a balance- of earnings and property prices (either renting or buying). The stereo-typical, just buy “up north”, might work for you- if you don’t mind living up there (and there is nothing wrong with up north at all). So, let’s compare some of the house prices & earning to see if London is really all its cracked up to be, or if actually there are better places to live (least from an earnings to house price ratio)
London v Manchester
The average house price in London is: £640,000 
The average house price in Manchester is £199,000 
The average salary in London is £34,000 
The average salary in Manchester is £28,000 
The earnings to house price ratio in London is a huge 18.8x salary to house price. Manchester by comparison is “just” 7.1x salary to house price. So, by using these figures- it would be much easier to buy in Manchester compared to London. This much might be obvious to most people- since London is so expensive- but did you think the average salary in Manchester was so high? Perhaps less obvious.
Do note that most banks won’t lend more than 4-4.5x salary, so even with a 10% deposit, you would need way more money down- or salary to purchase an average house. Of course, averages are just averages- there are houses for much cheaper than the average- and salaries both below and above these averages.
That brings us to Cardiff- average house price of £242,000  with average salary of £27,000  giving a 9.0x- slightly higher than Manchester. But, I don’t think this really tells the full story- Cardiff itself is a pretty small city (especially for a capitol one)- with just over 300,000 population. If you live just 15/20 minute drive/train away, for example up any of the valleys- the average house price drops considerably.
You can pick up a 2/3 bedroom house for well under £150,000- but keeping the Cardiff salary. Yes- you can do this in London, but the commute time isn’t going to be 15/20 minutes, its going to be at least an hour, each way. Even with that- I still bet you can’t find a 2 bed house under £200k odd (excluding shared ownership/flats etc)
That’s without talking about the public transport options of getting into Cardiff – new trains coming very soon, small amounts of traffic (compared to London). On the weekends- you can be in a nation park within an hour (Brecon Beacons)- or the beach in 30 minutes (Penarth etc). I maybe very biased, but Cardiff seems a great place to F.I.R.E
South Wales isn’t just Cardiff of course- there are a couple of other cities (Swansea and Newport) and a whole bunch of towns as well. If you want to stay somewhat nearby to Cardiff- then Caerphilly is only 7 miles as the crow flies- and trains run very frequently (every 15 minutes) with a brand new “South Wales Metro” system getting designed/implemented at the moment, with first new trains in 2021. If you didn’t fancy a town or city, there are tons of villages all around south wales- with housing choices from terraces, or detached houses with land. All at very reason prices- though it’s all about location, with places like the vale of Glamorgan demanding a rather large premium!