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You best off living away from South Ken and commuting in via tube. You'll still be under 30 minutes away.
Wimbledon, Putney and Fulham are you best bet for nice areas with some (debatably) reasonable priced housing.
This tube map [tube.tfl.gov.uk] should help you pick a spot that's easy to travel from.
Have a look at the property websites and list some areas that come up for you. That way we can comment on what your looking at (rather than off the cuff remarks).
Chris
Kensington is a VERY nice area :) and also very accessible by tube and bus.
Property in that area will be very highly priced. As well as chris_f's suggestions I would also look at Blackheath and Clapham Common - both are cheaper than Kensington but offer excellent housing (inc rented if you were looking for a 'base') and good localised nightlife/restaurants shopping etc next to large parks. And both are one tube change from the circle line. I have not lived there but commuted from kent and for many years so know the south of London pretty well through family, friends and work.
Good luck with the move
Ta
Limbo
I like North Kensington, it's very cosmopolitan, and not all that expensive up at the Ladbroke Grove end. In general, though, prices are lower south of the river. So buying a bike and getting a place in Clapham or Battersea would probably be the best bet overall.