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Affordability of city homes falls to 10-year low

Written by: Christina Hoghton
City house prices are now seven times average salaries, making it a huge challenge to get on the ladder without a large deposit

Home affordability across UK cities is at its worst level since 2007, according to Lloyds Bank.

It said that house prices as a multiple of average annual earnings have risen from 5.6 in 2012 to 7 in 2017.

Over the past five years alone, the average house price in UK cities has rocketed 36% to its highest-ever level of £232,945 in 2017.

But average city earnings over the same period have risen by just 9% to £33,420.

Unaffordable cities

The least affordable city is Oxford, where average house prices of £429,775 are over 11.5 times average earnings.

It’s followed by Cambridge (10.5), Greater London (10.2), Brighton and Hove (10.2), Bath (10.1) and Winchester (10.0).

Andy Mason, Lloyds Bank mortgage products director, said: “Buying a city property is the least affordable it’s been for a decade.

“There is also a clear North-South divide with only one Southern location appearing in the top 20 most affordable cities and only one Northern location appearing in the top 20 least affordable.”

Stirling is the UK’s most affordable city for the fifth year in a row, with average property prices of £186,084 just 4.0 times average earnings in the city. Londonderry (4.1) in Northern Ireland came second and Bradford (4.5) is the most affordable city in England.

Highest house price growth

Cambridge has recorded the biggest price rise of any UK city over the past decade with a gain of 47% from £288,403 in 2007 to £422,589 in 2017, compared to the average rise of 12%.

St Albans is now second with a rise of 44% followed by Brighton & Hove (39%), Greater London (31%), Cardiff and Canterbury (both 29%). Nine of the ten top performers since 2007 are in southern England with the exception being Cardiff in Wales (29%).

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