Homes in cities are the least affordable since

Property prices in Britain’s cities have become so high they are the most ‘unaffordable’ since 2007 when viewed against average annual wages.

Increasing numbers of people are having trouble getting on or moving up the property ladder as prices are up to seven times average annual earnings.

Oxford is a prime example of how skewed the property market in certain areas has become, with prices typically 11.5 times average yearly wages.

Affordable and unaffordable: Property price to earnings ratios across the UK

Back in 2007, the average cost of a home in one of Britain’s best known cities was around 7.5 times average annual earnings.

Following the ebbs and flows of the financial crisis, by 2012 the typical cost of a home in cities had fallen to 5.6 times the amount of an average pay packet.

Fast forward to 2018 and as well as Oxford, popular areas in Cambridge, Bath, Greater London and Winchester have all become out of reach for many, with property prices at least 10 times average annual salaries.

In the last five years, the average cost of a home in a city has risen by 36 per cent, from £171,745 in 2012 to £232,945 last year, Lloyds Bank said.

While house prices in places like Cambridge have risen by 47 per cent in the last decade, salary growth has stalled.

Average annual earnings in cities up and down the country have risen by just 9 per cent to around £33,420. 

Unaffordable: Oxford has the worst house price to average earnings ratio 

Unaffordable: Oxford has the worst house price to average earnings ratio 

THE 20 MOST UNAFFORDABLE CITIES IN THE UK
UK cities Region Price to Earnings ratio
Oxford South East 11.5
Cambridge East Anglia 10.5
Greater London Greater London 10.2
Brighton And Hove South East 10.2
Bath South West 10.1
Winchester South East 10
Truro South West 9.3
Exeter South West 9.3
Southampton South East 8.9
Canterbury South East 8.9
Bristol South West 8.8
Salisbury South West 8.8
St Albans South East 8.7
Chichester South East 8.7
Norwich East Anglia 8.3
Leicester East Midlands 8.1
York Yorkshire and the Humber 8
Gloucester South West 7.7
Portsmouth South East 7.5
Chelmsford South East 7.3
UK cities average 7
UK average 7.2

For those looking for better value in the housing market, head to Stirling, Londonderry, Bradford, Lancaster and Durham. Here, property property prices are five times or less above average annual salaries. In Stirling the average cost of a home is £186,084.

Taking other examples of where your money will stretch further, in Sunderland the average price of a home is 5.1 times average annual wages, while in Dundee it is 5.4 times average salaries. 

Lancaster and Dundee are the only two new entrants to the top 10 most affordable cities, sitting in fourth and ninth place respectively and all of the top 10 are located outside of the south of England. 

Andy Mason, Lloyds Bank mortgage products director, said: ‘City living suits the lifestyles of many people looking for shorter commutes with much of what they need on their doorstep, but buying a city property is the least affordable it’s been for a decade.’

He said there was also a ‘clear North-South divide’, with the least affordable cities list dominated by locations in southern England.

Affordable: Londonderry's housing market is still affordable, Lloyds Bank said

Affordable: Londonderry’s housing market is still affordable, Lloyds Bank said

THE 20 MOST AFFORDABLE CITIES IN THE UK 
UK cities Region Price to Earnings ratio
Stirling Scotland 4
Londonderry Northern Ireland 4.1
Bradford Yorkshire and the Humber 4.5
Lancaster North West 4.8
Durham North 5
Belfast Northern Ireland 5.1
Sunderland North 5.1
Lisburn Northern Ireland 5.1
Dundee Scotland 5.4
Swansea Wales 5.4
Perth Scotland 5.4
Salford North West 5.5
Hereford West Midlands 5.5
Liverpool North West 5.5
Carlisle North 5.5
Glasgow Scotland 5.5
Hull Yorkshire and the Humber 5.5
Newcastle Upon Tyne North 5.7
Preston North West 5.7
Inverness Scotland 5.8
UK cities average 7
UK average 7.2

In 2007, the average cost of a home in a city was £207,750, while average annual wages stood at £27,576. When the financial crisis started to bite, house prices dropped to an average of £182,467, but salaries crept up to around £28,879.

After the heat of the financial crash passed, average house prices stood at £180,548 in 2013, rising to £232,945 by the end of last year.

According to Nationwide’s latest figures, average UK house prices increased by 3.2 per cent in 2017, generating a level of ‘surprise’ as mortgage approvals are down and consumer spending remains sluggish. 

The unexpected rise in annual property inflation emerged against a backdrop of a slowing property market. The overall picture masks a divergence between sluggish areas in London and the commuter belt and greater activity in the Midlands and the North. 

Undoubtedly, the housing market will continue to be a political hot potato this year, with all eyes on rising interest rates, population growth, the interplay between supply and demand and price fluctuations. 

Earlier this month, official figures from the Office for National Statistics revealed that the average cost of a home in the UK was £226,000 in November, which is £11,000 more than at the same point a year earlier.

On the up: In the last five years, the average cost of a home in a city has risen by 36 per cent

On the up: In the last five years, the average cost of a home in a city has risen by 36 per cent

TABLE TITLE
Year Average UK city house price £ Average full time Mean earnings £ Price to Earnings ratio
2007 207,750 27,576 7.5
2008 182,467 28,879 6.3
2009 168,734 29,663 5.7
2010 173,427 29,851 5.8
2011 170,076 30,079 5.7
2012 171,745 30,643 5.6
2013 180,548 31,038 5.8
2014 194,374 31,443 6.2
2015 209,837 31,731 6.6
2016 225,238 32,483 6.9
2017 232,945 33,420 7



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