UK buyers knocked for six

Typical city home costs £195,107 - six times the average salary

Housing affordability has deteriorated to 2009 levels on the back of strong property price growth, research showed today. The average home in a British city now costs £195,107 or 6.1 times typical annual earnings before tax, according to Lloyds Bank.

It is the second successive year in which affordability has worsened, with properties costing an average of 5.8 times pay in 2014.

The group blamed the deterioration on the strong house price growth seen during the past year, with average house prices rising by 7 per cent.

But despite the recent increase in values, homes are still 15 per cent more affordable than they were at the peak of the last property market boom, when they cost an average of 7.2 times pay.

The improvement in affordability is due to the fact that house prices are still 6 per cent, or £12,600, lower than their previous high, while gross average earnings have increased by an average of 11 per cent during the past seven years.

Andy Hulme, Lloyds Bank mortgages director, said: “House price rises in the past two years have resulted in a deterioration in home affordability in the majority of UK cities, and generally widening the north-south affordability divide as the market has been strongest in the south.”

Oxford is the least affordable city, with the average house costing nearly 11 times typical local earnings.

It is followed by Winchester, which has a house-priceto-earnings ratio of 10.11, and Cambridge at 9.76.

Chichester and Brighton and Hove make up the top five least affordable UK cities, with properties costing 9.19 and 9.1 times local pay respectively.

Greater London is the seventh least affordable city, with a price-to-earnings ratio of 8.75 times, although the group said headline figured disguised considerable variation across the capital.

At the other end of the scale, Sterling in Scotland is the cheapest city in which to buy a home in relation to average local pay, with property prices of just 3.85 times earnings.

Londonderry is the second most affordable city with a price-to-earnings ratio of 3.92, followed by Lancaster at 4.03 and Bradford at 4.17.

There is a clear northsouth affordability divide, with 17 of the 20 least affordable cities being in southern England, while all but one of the most affordable ones are in northern regions, including Scotland and Northern Ireland.

Lichfield in the West Midlands has the highest priceto-earnings ratio outside of southern England at 6.95.

Ely in East Anglia is the only city in the southern half of the country to make it onto the list of most affordable places, with homes there typically costing 4.9 times local pay.

Aberdeen has seen the strongest house price growth during the past decade, with property values soaring by 88 per cent on the back of rising housing demand due to the strong performance of the area’s oil and gas industry.

Cambridge and Brighton & Hove saw the next biggest increases of 55 per cent and 52 per cent respectively.

London topped the table over a five-year period, with house prices rising by 40 per cent since 2010.

Hulme said: “The UK’s most successful cities economically have tended to see the strongest property price rises.

“Aberdeen, the country’s oil and gas capital, has recorded the biggest gains over the past decade whilst London has been the top performer during the economic recovery.”