Renters in Britain’s ‘Silicon Valley’ hand over more of their pay than San Francisco
Rent currently eats almost a quarter of average pay in the Oxford Cambridge Arc corridor – a powerhouse of UK research and development. By comparison, renters in the San Francisco Bay Area, one of the most expensive rental markets in the US spend about 15%.
This is according a new report from King’s College London on investment in the region published on Wednesday (04 November) which shows that the local authorities between Oxford and Cambridge produced £143 billion of output.
Output per head was £59,300 in Cambridge, £56,200 in Milton Keynes and £52,100 in Oxford, against an England average of £36,600. More of the Arc’s adults are in work than across England as a whole, and more of its firms are actively innovating (43% against 37% for England).
Much of the growth can be directly attributed to the universities of Oxford and Cambridge, which are an engine for economic growth in the region.
Since 2011, Oxford has produced more spinout companies than any other UK university, and Cambridge has the second most; between them they account for about one in five of all UK university spinouts.
Investment in Cambridge spinouts rose from £46 million in 2015 to £879 million in 2024. Cambridge companies raised $2.3 billion of venture capital in 2024, almost double the year before.
In 2025, two Oxford spinouts were sold for more than $1 billion each. One of them, OrganOx, was the largest acquisition of any UK university spinout to date.
This rapid growth and investment means global companies want to be in the area.
In April 2026, AstraZeneca restarted a £200 million expansion of its global headquarters on the Cambridge Biomedical Campus, which will house around 1,000 staff.
In July 2026, GSK chose the same campus for a £400 million global R&D centre, with room for more than 1,000 scientists. Firms are looking for more than 600,000 square feet of lab space in Cambridge even as a wave of new buildings has pushed vacancy up.
Silicon Valley prices
Despite all this positive investment, the data shows that the people who would fill those jobs struggle to live nearby.
Consulting group Public First estimates that rents absorb close to a quarter of average local incomes in the corridor, against about 15% in the Bay Area, one of the most expensive rental markets in the United
States.
The Arc also has relatively few younger workers, who are most exposed to housing costs and on whom growing firms depend, the researchers said.
“Ten years ago, Oxford and Cambridge were almost identical on productivity, wages and house prices. Since then, they have pulled apart. Between 2014 and 2024, Cambridge grew its housing stock by 15%.
“Oxford grew by 5% within its city boundary. Cambridge now has 41% more jobs in knowledge-intensive business services than a decade ago, and its productivity and wages have each risen by 15%.”
The researchers noted that Oxford’s productivity has not moved, and its average workplace wage has fallen in cash terms, from £807 a week to £797.28.
“This emerging difference is revealing because no gap in the performance of the two universities can explain it; both are world-class, and Oxford produces more spinouts than Cambridge. What differs is how much each city has built.
“As Cambridge built, homes became more affordable: house prices fell from 15 times local earnings to 10 times. In Oxford they fell only to 12.5 times. Centre for Cities concludes that Oxford’s main constraint ‘lies within the city itself’,” the researchers said.
Even more demand coming
Notably, the estimate holds house prices at 2023 levels. New rail, roads and jobs should push prices up.
Equally, building this many homes, even over time, could hold prices down. Government analysis suggests that a 1% addition to the housing stock lowers prices by about 2% nationally.
The extra homes would add about 1.3% to England’s stock by 2050, but about 15% to the Arc’s, so a local effect is likely.
How large depends on how many people move to the Arc to take up jobs, the researchers warned. The more demand grows alongside supply, the smaller the fall. Each 1% fall in prices would reduce the surplus by about £1.4 billion.
“The government’s land value estimates are designed for economic appraisal rather than financial modelling and may be slightly optimistic in lower-value areas. A 10% rise in house prices relative to building costs would add about £14bn to the surplus for use on strategic schemes.”
Conversely, a 10% fall would leave a shortfall of about £14 billion, the researchers said. They noted that housebuilding has also become harder in recent years as new rules and costs have been added, such as building safety and energy standards.
“The government itself says the cost of building a home is at a record high, partly because of regulation and policy costs.”
