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Affordability becoming more stretched but regional variation remains

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  • 21/01/2022
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Affordability becoming more stretched but regional variation remains
Nearly half of local authorities, 45 per cent, have a house price earnings ratio of six or more, up from 35 per cent five years ago, showing that affordability is becoming increasingly stretched.

According to Nationwide’s local affordability report, it also found that 14 per cent of localities have a ratio of below four, which is down from 22 per cent five years ago.

It also found that first-time buyer earnings ratios have increased in 72 per cent of authorities.

However, the report revealed that around a quarter of local authorities have improved affordability compared to 2016.

Nationwide said London had the greatest gap between the least and most affordable local authorities, from seven to nearly 15 on the house price to earnings ratio.

North East had the smallest gap between least and most affordable boroughs, ranging from around three to just over four on the house price earnings ratio.

The least affordable area to live is Kensington and Chelsea with a house price to earnings ratio of 14.7. This was followed by Oxford with a ratio of 10.1 and Hertsmere in the East of England with a ratio of 10.

The most affordable area in the UK was East Ayrshire in Scotland with a house price earnings ratio of 2.4.

The second most affordable area in the UK was Copeland in the North West of England at 2.8 and Country Durham in north East at 3.1.

The report continued that Westminster had seen the biggest improvement in affordability from 2016 to 2021, with house price earnings ratio falling from 18.1 to 14.3.

Cambridge’s house price earnings ratio also decreased from 10.3 to 8.8 in the same period, and Reading’s ratio has gone from 7.6 to 6.4.

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