From the Lloyds Bank’s Affordable Cities Review, the data shows that the affordability of homes across the UK is at its worst level since 2007. House prices are rising as a multiple of average yearly earnings from 5.6 in 2012 to 7.0 in 2017. The average price of a home in UK cities has increased by 36% in 2012, from £171,745 to £232,945, which is the highest level in 2017. In comparison, the average yearly earnings in a city over the same period has increased by 9% to £33,420. Consequently, the affordability of homes in UK cities is, on average, as its worst level since 2007. In 2007, the ratio of the average home price to yearly earnings was at 7.5.
The research also found that Oxford is the least affordable city for houses as the average prices for homes are at £429,775. This is 11.5 times higher than the average yearly earnings. Truro and Exeter are the newest cities to be listed in the top 10 least affordable cities list. These two cities have an affordability ratio of 9.3 with the prices of houses being £259,705 in Truro and £274,093 in Exeter. The only two cities outside southern England to appear in the list of top 20 of least affordable cities in the UK, are Leicester and York, with ratios of 8.1 and 8.0, respectively. In total, there are six cities that have an average house price costing at least 10 times more than the average yearly earnings. In addition to Oxford with an average ratio of 11.5, there is Cambridge (10.5), Greater London, Brighton and Hove (both 10.2), Bath (10.1) and Winchester (10.0). The average figure in London masks the significant variations across the capital with central boroughs, which is significantly less affordable than the average of Greater London.
For the fifth consecutive year, the UK’s most affordable city is Stirling. The average house price in Stirling is at £186,084, which is 4 times the average total yearly earnings. However, this figure has risen by 5% in the last year. In Northern Ireland, Londonderry (4.1) has remained as the UK’s second most affordable city. The most affordable city in England is Bradford with an affordability ratio of 4.5. In Wales, Swansea is named to be the most affordable city in that region with a ratio of 5.4. The only two new cities to make it into the top 10 most affordable cities are Lancaster and Dundee, sitting in 4th and 9th place, respectively. All of the top 10 most affordable cities are located outside of southern England.
About the Author
Stuart Mosely (CeFA, CeMap, CLTM) founded SJ Financial Solutions in June 2005 having spent 12 years with big corporates such as Halifax and Santander. He felt the personal touch and straight speaking was missing from financial and mortgage advice services and set up SJ Financial Solutions to change this.
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