Home affordability in UK cities at worst level since 2008

Home affordability in cities in the UK is at its worst level since 2008 with Oxford the most expensive urban location to buy a property and Stirling the cheapest, according to new research.

Over the past five years, the average UK city house price has risen by 32% from £169,966 in 2012 to its highest ever level of £224,926 in 2017. In comparison, average annual earnings over the same period have risen by only 7% to £32,796.

As a result, the affordable cities review from Lloyds Bank, says that average affordability in the nation’s cities has worsened with house prices rising as a multiple of average annual earnings from 5.5 in 2012 to 6.9 in 2017.

The average house price in Oxford is £385,372, which 10.7 times the annual gross average earnings in the city of £36,033 and five other cities have average house prices at least 10 times average annual earnings.

In Greater London and Winchester prices are 10.5 times annual gross average earnings, followed by Cambridge at 10.3 and Chichester at ten. The report points out that the London average figure disguises considerable variations across the capital with central boroughs significantly less affordable than the Greater London average.

There is also a notable North/South divide. Lichfield at 8.3 and York and Leicester at 7.6 are the only cities outside southern England which appear in the top 20 least affordable UK cities.

The 20 most affordable cities are all outside southern England with Stirling in Central Scotland the most affordable where the average price of £173,847 is 3.7 times the average gross annual earnings while Londonderry in Northern Ireland at 3.8 is the UK’s second most affordable city.

Two other Northern Ireland cities, Belfast at 4.6 and Lisburn at 4.8 are fourth and sixth while the rest of the 10 most affordable cities are Bradford at 4.4, Hereford at 4.7, Sunderland at 4.9, Durham at five, and Glasgow and Swansea both at 5.2.

‘City living is becoming increasingly expensive with average house prices at least 10 times average annual earnings in five of the UK’s cities. Affordability levels have worsened for four consecutive years as average city house prices continue to rise more steeply than average wage growth,’ said Andy Mason, Lloyds Bank Mortgage products director.

The research also shows that St Albans has recorded the biggest price rise of any UK city over the past decade with a gain of 65% between 2007 and 2017, compared to the UK cities average of 21%. Winchester is second with a rise of 59% followed by Chelmsford up 54%, Brighton and Hove up 46% and Cambridge also up 46%.

Over the past five years, London has recorded the highest house price growth with a rise of 57% while Chelmsford has the second highest increase in average house price at 55%, closely followed by St Albans at 54%.