Affordability sinks to eight-year low
The gap between average city house prices and local earnings across UK cities has its hit widest level in eight years, according to Lloyds Bank.
Its latest report shows that the average UK city house price has risen by 8% from £196,229 in 2015 to its highest ever level of £211,880 in 2016. This has resulted in average affordability in the nation’s cities worsening in the last 12 months from 6.2 to 6.6 times average annual earnings.
This is the third successive annual decline in affordability, which is now at its worst level since 2008.
Priced out of the South
The reports also reveals a significant North – South divide, with 17 of the 20 least affordable cities located in southern England – with only Lichfield, Leicester and York appearing in the Top 20 outside of the South.
Oxford is the UK’s least affordable city, with house prices nearly 11 times average earnings in the city.
By contrast, all of the 20 most affordable cities for homebuyers are outside of southern England. Londonderry is now both the UK’s most affordable and least expensive city. The average property price in the Northern Ireland city of £113,302 is 3.8 times the average annual earnings.
Andrew Mason, Lloyds Bank mortgage products director, said: “House price rises in the past three years have risen more steeply than average wage growth, making it more expensive to buy a home in the majority of UK cities. This has also widened the North – South divide, as house prices in the South have generally seen stronger growth than in the North. Winchester has recorded the biggest gains over the past decade, whilst London, not surprisingly, has seen the largest growth during the economic recovery of the last five years.”