Sunday, 31 May 2015

London vs. Warsaw - where's it better to live?

Big thanks to regular commentator Dr Marcin from around the corner, who as well as providing me with tip-offs regarding local development, also acts as a warning klaxon in the ideology department.

When I said a few days ago that I much preferred living in Warsaw to London, here is his riposte:
"London v. Warsaw: 
  • Substantially well developed public transport network
  • Better town-planning order
  • Cleaner
  • Not-destroyed pavements
  • Lack of stand-out ramshackle houses
  • Much more polite public services workers (for instance bus drivers)
  • A better information system
  • Greater ethnic/cultural diversity
  • Fewer gated residential estates
  • More theatres/cinemas/museums/art galleries
  • More airports
  • More sport/recreational facilities
  • More recreational green fields
  • More universities/higher schools/colleges
  • Substantially younger population
  • Substantially higher average salary
  • Much lower level of corruption
  • 38th v. 84th place in Mercer's 2015 Quality of Living Survey
  • Lower VAT "
So here's mine.

First things first: Warsaw is a much smaller city than London. Even if you question the official population statistics (1.8 million) and look upon Warsaw as an agglomeration rather than a city artificially constrained by its city limits, it's still around four times smaller in terms of population and three times smaller in terms of area than London. Therefore it has lower population density. So we'll not be comparing like with like - size wise, Warsaw's more akin to Birmingham or Manchester, the two urban areas competing for the role of England's second city. In London, you are lost, a minnow. In Warsaw, the chances of bumping into someone familiar is much higher.

But the key thing is economy. Let's get right to the point: London is an immeasurably richer city than Warsaw because of the accumulation of capital. Not being invaded or partitioned has its benefits. You can find yourself living in a £6m Kensington town house for no other reason than because your great-grandfather had the gumption to buy it for £3,000 back in 1910. Wages in London are artificially pumped up by City bonuses, which distort the housing market, an effect magnified by the endless demand for London property from the world's rich.

At the heart of the 'where's best to live' debate is a comparison of how much you can earn in both cities. The figure to bear in mind is this: the average salary in London, after tax, is a little over two and half times higher than average salary in Warsaw. Two and half. (Well, 2.65 to be precise.)

Sources: Gross average salary for London, £27,999, May 2015, after-tax pay calculated via the Salary Calculator. Gross average salary for Warsaw, 5624.89 zł, March 2015, after-tax pay calculated via Kalkulator Wynagrodzeń.

Average after-tax salaries compared

London Warsaw
£/month £1,844

£/year £22,126

zl/month 14,835 zl
3,985 zl

Right. Let's now look at living costs.

If you want to buy a family house of average size in Zones Four or Five - a three-bedroom terraced house with some 150m2 of useable space - you will need to budget for around £400,000 (over two million zlotys). To be able to put down a deposit on said house, you'd need around a 10% deposit, or £40,000. According to the Guardian (4 May 2015), quoting a KPMG report, you need to be earning £77,000 a year gross in order to be able to be a first-time property buyer in London. So a couple each earning £38,500 could afford to buy a place in London. And the average wage there is £27,999.

[One question I constantly have about the sustainability of Central London's economy is how in God's name does the service sector manages to find people to work in it. There are people working in cafes, restaurants, pubs, hotels, shops, earning £12,000 to £15,000 a year. How do they do it? Where do they live? Do they commute in from Zone Six, where you can still rent a small one-bedroom flat for £500 a month? Or do they live four to a room in Zone One, living on Tesco Value Sliced White Bread and baked beans?]

On the edges of Warsaw you'll find 150m2 houses selling for less than 800,000 zlotys (£140,000). According to this 2015 report, the median salary in Warsaw is 6,000 zlotys/month or 50,000 zlotys a year after tax. So a similar situation to that in London... BUT the killer is the transport.

A quarterly Warsaw central zone public transport pass costs 250 zlotys (at today's exchange rate, that's £43). This gives you a bit more geographic coverage than London Zones 1-3, a bit less than 1-4. Now, a weekly Zone 1-3 travelcard costs £37.70, a weekly Zone 1-4 travelcard costs £46.10. So public transport is 13 times more expensive in London than in Warsaw. And remember, folks, that median take-home pay in London is just two-and-half times higher than in London.

If you're dumb enough to drive to work (unless you have a company car), with cars and petrol costing pretty much the same in both cities, more fool you.

How much UK house will your salary buy? Have a look at this handy calculator.

Finally, my Warsaw vs. London arguments
  • Lower crime rate (burglaries, assault, car theft etc)
  • Far fewer knife-murders and stabbings in schools
  • Far less drugs in schools
  • Far fewer people wanting to blow you up for religious reasons
  • Safer to walk the streets at night
  • Faster rate of improvement in many areas of life
  • Proximity to countryside (my bedroom, 9 miles from the city centre, looks out over farmland)
  • Lower population density
  • No poncy class system
  • Ability to buy fresh seasonal produce from farmers' stalls on street corners all over town
  • Better climate (although this is changing)
  • Sense of pride in, and direct connect with, Warsaw's history
  • Sense of pride that I'm living in the city that my father is from
[Compare crime concerns here.]

So, I'm happy to be here, no plans of going back to London. I już!

This time last year:
Jeziorki, magic hour
[Read this post, you'll see why I love where I live]

This time three years ago:
Świdnica, one of Poland's lesser-known pearls

This time six years ago:
Spirit of place
[Another 'why I love Jeziorki so' post. Walking around for an hour without bumping into a single soul? Try doing that within a nine-mile radius of Hyde Park Corner!]


dr Marcin said...

Hi Mike,

thanks for yours response. It looks that you're more socially or environmentally oriented, in contrast to me - more urban/market oriented. However, some of financial figures are also important on yours "stance".

All the very best,

student SGH said...

Jaw drops open...

Dear fellow blogger, there are lies, damn lies and statistics. Sedlak & Sedlak reports (śmiech na sali, despite the firm's credentials, God knows how earned) fall into the third category and it takes a bit of common touch to realise the before-tax monthly earnings of PLN 8,000 are... a bit of unrealistic... Stats office figures for Warsaw appear more reliable and they tell the average (as you rightly point out it is also a distorted by outliers) salary is Warsaw in April 2015 stood at PLN 5,400, which gives some PLN 3,800 after-tax and here's the figure which should be used for comparisons, if they are to be accurate!

Besides, another interesting and well-written piece, yet details such as the one with earnings take the gloss off it. A pity...

Michael Dembinski said...

@ Student SGH...

Thanks for the link to the GUS data for Warsaw (nice and up-to-date). You make some valid points.

The demography section begins by pompously asserting:

"W 2014 r. Warszawę zamieszkiwały 1735442 osoby."

"In 2014, 1,735,442 people lived in Warsaw."

Err... right. This includes all those people resident but not registered? Janek from Ostrów Mazowiecki? Sebek from Skarzysko-Kamienna? Pani Oksana from Dnepropetrovsk?

Anyway, let's assume that the actual number of people living in Warsaw was a good deal higher than 1,735,442.

GUS gives 'average gross wages and salaries in the enterprise sector' in March 2015 as 5,624.89 zł.

I think the problem lies in 'gross' and 'take-home pay' - clearly not the same, and in Sedlak and Sedlak differentiating (rightly) median from average pay. I shall revisit and recalculate.

student SGH said...

@ Michael,

I do not feel capable of assessing demographic statistics, GUS fails to reveal its calucation methodology...

Despite knowing that what is transferred into your bank account each month determines your purchasing power, I would argue to use before-tax salaries for comparisons. Pre-tax wages better reflect strength of the local economy, i.e. how much it is willing and can afford to pay to labour force providers, while after-tax salary indicates how much the government seizes in form of income taxes, social security contributions etc. Besides, tax rates, allowances, deductions, etc. might differ between individuals.

Michael Dembinski said...

@ Student SGH

I've revised the earnings, looking at AVERAGE not MEDIAN, and TAKE-HOME PAY not GROSS PAY on the basis of salary calculators in both countries. This has changed little; the conversion factor between London and Warsaw is now 2.65 rather than 2.49.

So the basic argument remains the same. Do see the shocking KPMG report about affordability of London property (links to article in the Guardian)

I do take your point about employees' affordability from the employers' perspective. This is a better measure of the comparative strengths of the economies. But from the point of view of someone trying to work out whether they can afford to pay off a mortgage, the take-home amount is more useful.

Sigismundo said...

Warsaw vs. London!!!

OMG, this is my pet subject. I hardly know where to begin.

Well, I could write an article longer than both pieces above combined, but I won't.

To me all this talk about disposable income is irrelevant. It's all a question of cultural wealth. London is without doubt one of the world's top five cities, perhaps top three cities, and some (me included) would argue it is the world capital. It has so much gorgeousness and culture that it can fill your brain for a lifetime (viz Pepy's famous adage that "If you're tired of London, you're tired of life".) London is smokey and polluted and busy and crazy, and increasingly full of aliens, but it's alive. Not just alive but positively hyperventilating.

In contrast Warsaw, despite the recent rapid growth seems to me like a home for workaholics and OAPs (of the worst kind, the czapki starobabskie variety, completely inert and barely able to walk, unlike UK OAPs, who broadly speaking are positively sprightly in comparison). Nothing happens here in the international cultural sphere (Football aside, but I don't give an F. about football, or Speedway, or anything of that ilk). The museums host one or two good exhibitions a year, if that. Hipster fashion is at last starting to make an impact on the way people look, but until recently it's been a city of clones. The club scene is great if you're in your twenties, but I'm not. And still people don't smile and look at each other in the street.

Anyways, exaggerations aside, let's talk about quality of life, not standard of living. These are two entirely different things, often misunderstood, especially in Poland.

Alexander said...

Countries are Always difficult to compare, and arguments are a never ending story. But did you use any purchasing power tool that included taxes ?
And another remark, Pound sterling is very high right now, and the Polish Zwoty, linked to the euro, is also draged down by the poor economic performance and resulting ECB actions, of the euro.

Best regards,


AndrzejK said...

All I can say is that Ealing Broadway is now a stinking rabid cess pit even during the day. Not five minutes go by without a police car driving by on full siren off to another incident.

I had a small (24 sq.m.) flat in Pitshanger Village which I used to stay in when in London. That was until I was hit for GBP 3,500 annual service charge and rates of close to GBP 1,000. So I sold. The property is now "worth" some quarter of a million pounds (yes 24 square metres). For that price you can buy a new build 100 plus square metre flat in the more salubrious parts of Warsaw and be able to commute to the centre in say 40 minutes.

Oh and the taxi fare from Okęcie to Wilanów is some 35 pln whilst a taxi from Heathrow to Ealing (similar distance) involves taking out a seperate mortgage.

And one last thing, everyone I meet in Warsaw (apart from tourists and the odd ex pat) speaks Polish.

student SGH said...

the KPMG report on property affordability in the UK is indeed horrifying. Compared to this, property prices in Poland, though still steep in relation to earnings, appear cheap. In Poland affordability measures are different, yet in Warsaw one after-tax salary will buy you 0.6 sqm of an average flat (meaning at average transaction price of PLN 7,200 per sqm, as indicated by NBP and AMRON SARFIN reports), not close to 1.0 in pre-EU-accession-boom times, yet far more than 0.30 or 0.35 at the height of property boom in first half of 2008.

In the UK one day the whole society will pay the price for poor access to housing. People who cannot be their basic needs met will mutiny...

Paddy said...

Great topic and timing, as I was just thinking of doing a quantative assessment of why Poland is actually, pretty damn lovely to live in compared to the UK.

I am amazed that the ability to buy delicious fruit and berries across the city comes up in your list too. It's definitely in my top 10 reasons for why I love living here as well.

Incidentally good luck with finding a habitable flat in Zone 6 for 500 quid!! Did a quick check and circa. 1000 pcm seems to be the current rate.

Anonymous said...

@ Sigismundo (31 May 2015 at 23:42)

"Sir, when a man is tired of London, he is tired of life; for there is in London all that life can afford."

Two points:
The quote is attributed to Samuel Johnson rather than Pepys (whose city pleasures tended to be rather ... hmmm ... peculiar).

And the relevance of affordability - it always there, sometimes just one sentence away.