Oxford named as least affordable city to buy a house in the UK

Londonderry and Stirling are the UK’s most affordable cities in terms of house prices with Oxford being the least, according to new research.

Overall, house prices in cities have outpaced earnings growth by 11%, causing home affordability to reach on average, its lowest level since 2007, when the ratio of house prices to earnings stood at 7.5.

The average house price within UK cities has risen from £180,548 in 2013 to its highest ever level of £248,233 in 2018, the research from Lloyds Bank also shows. In comparison, average city annual earnings over the same period have risen by just 11% to £34,366.

Oxford has an average house price of £460,184, some 12.6 times average annual earnings in the city of £36,430, making it the UK’s least affordable city.

There are seven cities with average house prices above 10 times the average annual earnings. These are Chichester at 11.5, Winchester 11.3, Truro 11.1, and Greater London, Bath and Cambridge, all at 10.3.

However, the London average figure disguises considerable variations across the capital with central boroughs significantly less affordable than the Greater London average.

Stirling in Scotland and Londonderry and Northern Ireland are the most affordable cities, with an average house price to earnings ratio of 4.4. Stirling is in the top spot for the sixth consecutive year.

These are followed by Newry in Northern Ireland at 4.5, Bradford at 4.6, Lancaster at 4.7, Belfast and Aberdeen, both at five, Perth, Hereford and Sunderland all at 5.1 and Swansea at 5.5.

House price growth has been the highest in Winchester over the past decade, up 93% from £281,224 in 2008 to £541,891 in 2018, compared to the UK cities average of 35%. Chichester is second with a rise of 76% followed by Greater London up 69%, Cambridge up 66%, St Albans up 64% and Oxford up 59%.

Over the past five years, Chichester has recorded the highest house price growth with a rise of 62% from £277,654 in 2013 to £450,023 in 2018. Cambridge has the second highest increase in average house price at 61%, followed by Newcastle upon Tyne up 56%, Ely up 54% and Lichfield up 52%.

‘Buying a home in UK cities remains challenging, as average house prices are outpacing wage growth. However the market has seen the number of first time buyers at a high and home owners are still attracted to cities across the UK, in spite of rising costs,’ said Andrew Mason, mortgage products director at Lloyds Bank.

‘Over the past five years, more than half of northern cities have made the UK top 10 in house price growth, whereas over a longer period, southern cities dominate,’ he added.