Housing affordability reaches worst levels in 9 years

Housing affordability reaches worst levels in 9 years

 

UK house prices have risen 32% over the last five years, significantly outstripping wage growth of just 7%.

Summary

  • Since 2012 house prices in UK cities has increased from £169,966 to £224,926
  • Oxford is named the least affordable city, followed closely by London
  • There is a significant imbalance between property price growth and wage inflation, particularly in southern cities

 

Home affordability in UK cites is at its worst level in almost a decade according to the latest Affordable Cities Review from Lloyds Bank, which reveals a 32% rise in property prices over the last five years, while average earnings only rose by 7%

Since 2012 the average price of a UK city house has increased from £169,966 to £224,926, with Oxford topping the list as the most expensive location, where the average house price is £385,372, 10.7 times the city’s annual gross average earnings of £36,033.

Andy Mason, Lloyds Bank Mortgage Products Director, commented: “City living is becoming increasingly expensive with average house prices at least 10 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.”

This imbalance between property price inflation and salary growth is particularly prevalent throughout the south of England. Recording a rise of 57%, London has seen the highest price growth over the past five years, and with house prices 10.5 times annual gross average earnings, the city remains the second least affordable housing market, followed by Cambridge at 10.3 and Chichester at 10.

There is a clear north/south divide within the UK property market, with only 3 cities outside of southern England, listed among the top 20 most expensive housing markets, while not one southern city is listed among the top 20 most affordable locations.

It is for these reasons that many investors are now targeting prime regional northern cities, where property prices are lower and yields much higher.

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