Buying a home in UK cities is less affordable

New homes PeterboroughBuying a home in a town or city in the UK is becoming less affordable according to figures releases by Lloyds Bank. The past year has seen a deterioration in affordability in UK cities, driven by rising house prices across the country, reports the Lloyds Bank Affordable Cities Review.

The average UK city house price has risen by 7 per cent, from £181,667 in 2014 to £195,107 in 2015. This has resulted in affordability in the nation’s cities worsening in the last 12 months from 5.8 to 6.1 times gross average annual earnings; the second successive annual decline in affordability.

Affordability in UK cities is, on average, now at the same level as in 2009 but is 15 per cent lower than the peak of 7.2 times earnings in 2008 at the height of the last housing market boom. The overall improvement in affordability across UK cities as a whole over the past seven years has been caused by a combination of an average house price decline of £12,630 (-6 per cent), and an increase in the gross average annual earnings in UK cities of £3,058 (+11 per cent).

In the East, Cambridge is in the top five least affordable cities along with Oxford, Winchester, Chichester (9.19) and Brighton and Hove (9.10). At the other end of the spectrum, nineteen of the 20 most affordable cities for homebuyers are outside southern England with the exception being Ely in East Anglia.
Peterborough (5.39) is one of the most affordable cities in the southern half of the country with an average house price of £166,747 which has increased 11 per cent over the past ten years.

Andy Hulme, Lloyds Bank mortgages director, commented: “House price rises in the past two years have resulted in a deterioration of 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. 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.”

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