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The boroughs that forgot to save

Wednesday, 27 July 2011 3:01 PM

Throughout the UK, it’s common for those living in areas with high house prices to also have a lot stashed away in savings. However, certain London boroughs are bucking the trend, according to figures released today.

Research by Halifax has found that, despite having house prices that are significantly above average (even within London), Hackney, Lewisham and Southwark also have some of the lowest average savings balances in the country.

The contrast in Hackney is most noticeable, with an average house in the east London borough costing £305,136 but residents holding an average of just £3,224 in their savings accounts. In Lewisham and Southwark house prices average at £235,556 and £325,770 respectively, and people in each area have an average of £3,889 and £4,069 in savings.

At the other end of the savings scale, people living in Kensington and Chelsea – a south-west London borough which commands the UK’s highest average property price at £634,637, 262 per cent above average – Halifax reported an average customer savings balance of £9,654.

Those living in the Shetland Islands, meanwhile, were the only group to feature in the top ten savers list despite property being worth less than the national (-25 per cent) and regional (-7 per cent) averages.

Amongst the ten areas with the lowest average savings balances, only Hull (£4,133) and North Lanarkshire (£4,225) also had some of the lowest average house prices (Hull £100,550 and North Lanarkshire £104,148).

Nitesh Patel, a Halifax economist, said: “The relationship between savings balances and house prices is typically a strong one although there are some exceptions, mainly in London.

“Areas with high house prices tend to be populated by people with high savings balances. This is largely what you would expect given that areas with the highest savings and house prices tend to be ones where earnings are also relatively high.”

Patel continued, “Several areas in London, however, have amongst the lowest savings in the country but house prices are above the national average. This could be because housing costs take up a relatively high proportion of income leaving limited scope for savings.

"Savings play an increasingly important part in the housing market, helping to provide the necessary funds to put down as a deposit when buying a home. Savings also play a significant role when planning for your financial future, so it is important to establish good savings habits as early as possible."

The UK areas with the highest average savings balances
 

Local authority district

Average savings balance

Average house price

House price compared with UK average

House price compared with regional average

Mole Valley

 £9,768 £379,396 116% 64%

South Bucks

 £9,717 £377,220 115% 63%

Christchurch

 £9,702 £210,564 20% 8%
Kensington and Chelsea £9,654 £634,637 262% 121%

Chiltern

 £9,567 £413,802 136% 79%

Shetland Islands

 £9,262 £131,916 -25% -7%

Elmbridge

 £9,217 £409,606 133% 77%
Richmond upon Thames £9,116 £428,466 144% 86%
Derbyshire Dales £8,919 £238,328 36% 68%

St Albans

 £8,908 £372,818 112% 62%

Based on average savings in the 12 months to April 2011


The UK areas with the lowest average savings balances
 

Local authority district

Average savings balance

Average house price

House price compared with UK average

House price compared with regional average

Hackney

 £3,224 £305,136 74% 6%

Newham

 £3,631 £199,776 14% -13%

Lewisham

 £3,889 £235,556 34% 2%

Manchester

 £3,932 £123,820 -29% -8%

Southwark

 £4,069 £325,770 86% 13%
Barking and Dagenham £4,103 £180,561 3% -37%
Kingston upon Hull £4,133 £100,550 -43% -24%
North Lanarkshire £4,225 £104,148 -41% -27%

Glasgow City

 £4,266 £126,168 -28% -11%

Knowsley

 £4,326 £109,429 -38% -19%

Based on average savings in the 12 months to April 2011

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