The best place to save in the UK: Which UK regions have the highest average household income and lowest cost of living?

FIRE is all about obtaining enough funds so that one does not have to work any longer. The journey is often long and depends on a high savings rate (the proportion of your income you save) to get there. The important part is how much you can save after taxes. Living costs are also important as they are generally the highest cost you will have. So, can you save more by moving to a different part of the country?

Building wealth is key to success, and you can see where you currently stand in the UK here.

As I’ve mentioned before, the UK offers a good range of vehicles such as SIPPS, ISAs, etc for investing. However, does where you live in the UK determine how quickly you will get to the magic FIRE number?

I decided to run some numbers to find out.

The UK government helpfully produces figures on the average disposable income per household in each UK region. The data sources are listed at the end of this article. The government figures, for the first time, include statistics from PAYE, and other income sources (previously it was only based PAYE tax returns which only took account of employee’s incomes). Therefore, the figures are the most accurate reflection of the true average income in each region.

Average household income UK by region

The gross disposable household income (GDHI) is per head of population and is the amount of money each household has left after taxes and national insurance has been paid. There is limitations on using averages but I think it gives a good indication for our purposes.

Average gross disposable income uk by region
Average gross disposable household income by region in the UK

Average gross disposable household income by region UK

Generated by wpDataTables

Note that the tables will display best on the desktop view, and sadly don’t seem to work on the WordPress app.

Unsurprisingly, London has the highest disposable income per person in the UK. The lowest is the North East region.

UK regions

Average property prices by UK region

The average property prices in each of these regions is as follows:

Average house price by region in the UK

Again, London is miles ahead at nearly £500k for an average house. The North East is again, last. However, housing prices do not directly correlate with average incomes. It is well known that throughout the property booms in the noughties that this link was broken so I won’t go into why that is the case, but it’s a matter of supply and demand, foreign investors, and inherited wealth.

See the table below for the actual figures.

Mr/Ms Average

Lets assume I’m dealing with an average person earning an average salary in each region of the UK. That person also owns an average property which cost the average house price. They also have a mortgage which is 75% of the value of the house, is 25 years and has a 3.25% interest rate.

For each region I’ve calculated the mortgage likely to be paid on each of these regions using Google mortgage calculator. That gave me these results.

I’ve then looked at the annual cost of the mortgage (12x monthly payment) and deducted that from the average disposable income.

Average GDHI and Average GDHI after mortgage

This table produced some surprising results. Assuming a totally average income and house, Mr/Ms Average living in Scotland will have the most disposable income remaining. In London, the situation is grim, and the average person will have very little left to spend or indeed, save. Happily, the average person in the North East, despite having the lowest income, will be relatively well off compared to his Average London compatriot.

Average UK house price by region with average mortgage payment

Generated by wpDataTables

What if Mr/Ms Average rents?

In some of the regions, the hard reality is that the average salary won’t allow you to borrow enough to obtain a mortgage at the value you need for the average house at a 75% Loan to Value ratio. So let’s have a look at renting.

Average rents by region in the UK are as follows:

Average rent across the UK by region.

If I carry out the same exercise and deduct the average annual rent from the average GDHI you get the following chart:

GDHI remaining after rent and average GDHI.

This chart shows that on average, renting in the South East will leave you with the most disposable income. Renting in the West Midlands on an average income will leave you worst off. However, the range is much smaller with the West Midlands being on £10,482, and the South East having £13,518 remaining.

Interestingly, the average rent is working out cheaper than buying an average house on an annual basis. You will be able to save the most in the South East.

Average UK GDHI remain after average rent by region

Generated by wpDataTables


I don’t have many conclusions to draw as clearly no one is going to be the average, and there will always be an exception to the rule. The average income in London is so high because so many people have astronomically high incomes. But at the same time, it is possible to earn a high income in the North East.

However, perhaps these chart shows that post-FIRE you may want to live somewhere like Scotland or the North East to benefit from the low property prices.

If you are working and renting, the South East of England leaves you with the most money spare to save.

All this goes to show that wherever you choose to live, you need to increase your income and reduce your costs. If you rent somewhere below average, you will have much more income to invest and save, and if you buy a below-average price property, you will have more cash to invest.

References and data sources:

Data I used to create the graphs:

All data for GDHI / property

Generated by wpDataTables

Gross disposable household income:

UK House price data:

Rental data for England:

Rental data for Wales:

Rental data for Northern Ireland:

Rental data for Scotland:

5 thoughts on “The best place to save in the UK: Which UK regions have the highest average household income and lowest cost of living?

  1. Very interesting insights, I suppose buying a place on an average salary in London would be extremely tough. I belong into the renting in London group, and housing costs are at least 80% of my annual spend, even though my rent is significantly lower than the average London price quoted here. I can only save upwards of 50% of my post-tax income because I am so frugal in other areas of life.

    1. Yes I’d imagine that most people on the average have some form of assistance to get a deposit for a house.

      The average rent includes all types of rentals, and I think that price is about a 1-2 bed in my area. Of course renting a room or studio could get you somewhere cheaper. Always makes me wonder why I pay so much to live here!

  2. Interesting post. If the feeling of wealth is determined by free cash flow, then those with the largest gap between earnings and living costs should feel the wealthiest.

    Geo-arbitrage sees people trade earnings for quality of life, in the UK that often entails increasing commute times in order to reduce housing costs. The smart ones figure out where their “enough” point is, then seek to increase their feeling of wealth by maximising that gap.

    That said, while cash flow makes us feel wealthy, real wealth is generated via capital growth. So those folks in London who managed to get on the housing ladder, and keep up with their mortgages, will often end up being wealthier than those living elsewhere. It just may not feel like it, because their wealth is trapped inside their expensive owner-occupied homes. To each their own!

    1. Thanks and much appreciated comment.

      Absolutely right regarding the owner occupiers. I see my neighbours here in London living in properties worth millions that were presumably purchased a long time ago (at a more reasonable price). They drive old beater cars and are not flashy in any way. Not sure what to make of it or who can afford to buy their property once they move on.

      Buying property is one of the few ways us “consumers” can legally leverage on assets. The irony is we can’t use the wealth!

      Trying my best to avoid the commuting trap!

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