Housing crisis: Which UK cities are most affordable?

Home affordability across UK cities is at its worst level since 2008, with buyers needing on avaerage seven times their annual salary to buy a property. According to the Lloyds Bank’s Affordable Cities Review, the average UK city house price over the past five years has risen by 32% from £169,966 in 2012 to its […]

Home affordability across UK cities is at its worst level since 2008, with buyers needing on avaerage seven times their annual salary to buy a property.

According to the Lloyds Bank’s Affordable Cities Review, the average UK city house price over the past five years has risen by 32% from £169,966 in 2012 to its highest ever level of £224,926 in 2017.

In comparison, average city annual earnings over the same period have risen by only 7% to £32,796. As a result, average affordability in the nation’s cities has worsened with house prices rising as a multiple of average annual earnings from 5.5 in 2012 to 6.9 in 2017.

Affordability in UK cities is on average at its worst level since 2008 when the ratio of average house price to earnings stood at 7.2.

The UK’s least affordable city is Oxford, with the average house price now £385,372, which is nearly 11 times (10.7) annual gross average earnings in the city (£36,033).

The other cities with house prices at least 10 times average annual earnings include Greater London (10.5), Winchester (10.5), Cambridge (10.3) and Chichester (10.0).

The London average figure disguises considerable variations across the capital with central boroughs significantly less affordable than the Greater London average.

There is also a notable North – South divide. Lichfield (8.3), York (7.6) and Leicester (7.6) are the only cities outside southern England which appear in the top 20 least affordable UK cities.

Unsurprisingly, the most affordable cities are all outside southern England.

The former Scottish capital of Stirling is the UK’s most affordable city. At £173,847, the average property price in Stirling is 3.7 times average gross annual earnings. Londonderry (3.8) in Northern Ireland is the UK’s second most affordable city.

Two other Northern Ireland cities, Belfast (4.6) and Lisburn (4.8), are placed 4^th and 6^th.

Northern English, Scottish and Welsh cities make up the remainder of the 10 most affordable cities – Bradford (4.4), Hereford (4.7), Sunderland (4.9) and, Durham (5.0) in England, with Glasgow (5.2) in Scotland and Swansea in Wales (5.2). 

Andy Mason, Lloyds Bank mortgage products director, said: “City living is becoming increasingly expensive with average house prices at least ten times average annual earnings in five of the UK’s cities.Affordability levels have worsened for four consecutive years as average city house prices continue to rise more steeply than average wage growth.

“House prices in the south have generally seen stronger growth than in the north.  St Albans has recorded the biggest gains over the past decade, whilst London has been the top performer during the recovery.”

St Albans has recorded the biggest price rise of any UK city over the past decade with a gain of 65% between 2007 and 2017, compared to the UK cities average of 21%.  Winchester is second with a rise of 59% followed by Chelmsford (54%), Brighton & Hove (46%) and Cambridge (46%).

All 10 cities with the largest house price growth since 2007 are in southern England.

Over the past five years, London has recorded the highest house price growth with a rise of 57%.

Chelmsford, a newly-created city as part of the Queen’s Diamond Jubilee celebrations in 2012, has the second highest increase in average house price (55%), closely followed by St Albans (54%).

Eight of the 10 top performers since 2012 are in southern England with the exceptions being Salford in the North West (51%) – home to Media City – and Coventry in the West Midlands (48%).

20 Most Affordable UK cities

Source: Lloyds Bank, ONS

20 Least Affordable UK Cities

Source: Lloyds Bank, ONS