Oxford has once again been named the UK’s least affordable city by the Lloyds Bank’s Affordable Cities Review. Now, the average home price is nearly 11 times the annual gross average earnings.
Home affordability is measured by comparing average city house prices and average regional pay. The average city house price across the UK has risen by 32% from £169,966 to the highest ever level of £224,926 in 2017. By contrast, average city annual earnings in the same period have only increased by 7%, to an average of £32,796.
Due to the rapid increase in house prices and slow growth in earnings, the price to earnings ratio has risen from 5.5 in 2012 to 6.9 in 2017. This means that housing affordability in UK cities is now at its worst level since 2008.
The disparity between housing price and average wages is most exaggerated in Oxford. The average price for a home is £385,372, which is 10.7 times the average local earnings of £36,033.
Home affordability in Oxford has long been a struggle, with restrictions on building in the city leading to a shortage of new properties. Additionally, higher-priced homes in the north of the city may drive up the average home price, and Oxford’s proximity to London has made it a popular location for higher-earning commuters who can afford higher-prices homes.
The average price to earnings ratio for UK cities is 6.9 times the average regional earnings, and the top five least affordable cities all have average home prices at least ten times average regional earnings. Oxford is followed by Greater London (10.5), Winchester, (10.5), Cambridge (10.3), and Chichester (10.0).
The top five least affordable cities are in southern England, and only three cities outside of southern England appear in the top 20 least affordable cities. They are Lichfield (8.3), York (7.6) and Leicester (7.6).
Lloyds has been recording this analysis of housing affordability since 2004, and it has consistently shown that the affordability crisis is disproportionately affecting southern England.
All of the 20 most affordable cities in the UK are in the north. The former Scottish capital of Stirling is the most affordable city, with the average property price (at £173,847) just 3.7 times the average local earnings. It is closely followed by Londonderry (3.8) in Northern Ireland.
Regarding the affordability crisis, Lloyds Bank Mortgage Products Director Andy Mason 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.”