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Home affordability in UK cities deteriorates to 2009 levels

by: Emma Lunn
  • 27/03/2015
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The past year has seen a deterioration in house price affordability in UK cities so much that average affordability is back at 2009 levels.

According to the Lloyds Bank Affordable Cities Review, the average UK city house price has risen by 7%, from £181,667 in 2014 to £195,107 in 2015.

House price inflation means the average property is now 6.1 times the gross average annual income, compared to 5.8 times last year. It’s the second successive annual decline in affordability. Affordability dipped to 7.2 times earnings in 2008 after the credit crunch took hold.

Oxford is the UK’s least affordable city. The average house price of £361,469 is 11 times (10.89) the gross average earnings in the city.

Winchester (10.11), Cambridge (9.76), Chichester (9.19) and Brighton and Hove (9.10) make up the top five least affordable cities.

Average London house prices are 8.75 times average gross annual earnings with central boroughs less affordable than the Greater London average.

With an average property price of £158,645, 3.9 times gross average annual earnings, Stirling is the UK’s most affordable city despite a deterioration in affordability over the past year.

Four of the 10 most affordable UK cities are in Northern Ireland due primarily to the relatively low house prices in the country: Londonderry (3.92), Belfast (4.49), Newry (4.51) and Lisburn (4.63). Lancaster (4.03) and Bradford (4.17) are the most affordable cities in England.

Andy Hulme, Lloyds Bank mortgages director, said: “House price rises in the past two years have resulted in a deterioration in home affordability in the majority of UK cities, and generally widening the north/south affordability divide as the market has been strongest in the south.

“The UK’s most successful cities economically have tended to see the strongest property price rises. Aberdeen, the country’s oil and gas capital, has recorded the biggest gains over the past decade whilst London has been the top performer during the economic recovery.”

House prices in Aberdeen have gone up 88% over the past 10 years as a result of rising housing demand due to the strong performance of the oil and gas sector over most of the period. Cambridge (55%) and Brighton & Hove (52%) saw the largest increases in England.

Going back just five years, London has seen highest house price growth with a rise of 40%, followed by Winchester (39%) and Cambridge (37%).

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