San Francisco, London and Hong Kong are the most expensive places in the world to rent an apartment with Prague and Cape Town the most cost effective in a ranking of 20 cities popular with expats.
Also expensive are Tokyo and New York City, according to the research from Barratt London which ranks the cities based on percentage of salary needed for a one bedroom apartment.
In San Francisco average rental prices account for 47% of average salaries in the city, while in London it is 45% and in Hong Kong 44% with average rental prices at £2,768, £1,250 and £715 per calendar month respectively.
The report points out that despite reports of a more favourable rental market in London, a one bedroom apartment in the city is costing renters almost half of their monthly salary. But rents are still cheaper in London than in New York where they average £2,532 but in New York that amounts to 40% of wages.
Rents are also more expensive in Sydney, Australia, than in London at £1,558 but this amounts to just 28% of the average salary.
Prague and Cape Town are the cities most relative in respect to income and rental prices, with wage to rent ratios of 21% and 23% respectively. Dublin, where rents average at under £950, requires just 25% of its tenant’s salaries.
‘Rental prices in London continue to demand too much of the occupier, to the extent of almost half of their monthly pay cheque. Renting must remain a viable option for those looking to move home, but residents might want to consider a buying market that offers plenty of incentives for first timers,’ said a spokesperson for Barratt London.
‘The London Help to Buy scheme, for example, is helping first time buyers get on the property ladder more affordably, with just a 5% deposit and an equity loan that is interest free for the first five years,’ he added.
Despite high rental prices, London’s home ownership rate of 38% falls well below other cities around the world. In Singapore, where rent demands 40% of average salaries, more than 90% of people own their own home. In Rome, where the wage to rent ratio is the same, home ownership is at 73%.