According to a report by Lloyds Bank, housing affordability has hit its lowest level for 12 years in UK cities with 7 of the cities reviewed having an average house price of more than 10 x the average local earnings. There were even a couple of cites prices that hit over 12 x average local earnings.
Lloyds Bank also revealed the best house price to earnings ratios were in Scotland and Northern Ireland with an average of around 4 x average local earnings.
City populations are growing rapidly and demand for property is pushing house prices up in most large urban areas. The average UK city house price has increased by 37% over the last 5 years and is now £248,000.
House price rises have not put off some first-time buyers though as the market has seen many ‘first timers’ still purchasing property in cities.
Lloyds Bank figures revealed that Greater London was the fifth least affordable UK city, with an average house price of £503,000 which is 10.3 x the average earnings of £48,604.
Oxford having an average house price of £460,000 which is 12 x the city’s average wage and Winchester in Hampshire over the past 10 years saw house prices increase by 93% to £541,891.
Figures suggest homebuyers should be heading North or over the Irish sea where property prices are more affordable.
Derry-Londonderry in Northern Ireland has average house prices of £137,400, which is 4.4 x average local earnings. Stirling in Scotland is also a more affordable area with house prices 4.4 x average local earnings.
For England, Bradford in Yorkshire was 4th on the affordability list with an average house price of £139,712 which is 4.6 x average local earnings.
House price inflation is still higher than wage inflation which affects affordability anyway. IN addition, the law of supply/demand economics will always mean that demand in many city areas will be higher than other rural and urban areas due to better career/job prospects which then creates a supply shortage thus driving prices up even further.