The Lloyds TSB Affordable Cities Review has revealed that people looking to live in cities are finding the cost of purchasing a home the most affordable for almost a decade.
The average asking price for a home in a UK city currently stands at £173,202 which is 5.5 times the gross annual average earnings. This is the lowest ratio since 2003 when the figure stood at 5.3 and is lower than the 5.7 from 12 months ago.. he highest recorded figure was in 2008 when the ratio stood at a whopping 7.2. However, city living is still more expensive than the UK average ratio of 4.3.
The improvement in the affordability of city homes has been attributed to the significant drop in city house prices. Since 2008, the average city house price has fallen by 18% (£37,403) from £210,605 in 2008 to £173,202 in 2012.
The North West city of Salford is currently the most affordable UK city to live in with an average property price of £102,391. This sum is lower than 4 times the gross annual average earnings with a ratio of 3.81 and is partly due to a 32% decrease in the average property price of that part of Greater Manchester since 2008. Londonberry and Bradford follow with ratios of 3.87 and 3.98 respectively.
Seven out of the eight most affordable cities are in Northern Ireland and the north of England. Ely in the East of England is the most affordable city in the south of England (4.60).
The least affordable city in the UK is Truro in the South West where the average property price (£250,489) is nearly ten times (9.71) gross average earnings in the area. The quality of life benefits associated with living in this picturesque part of Cornwall have supported prices here over the past decade. Oxford (8.80) is the second least affordable city, followed by Winchester (8.76).
Inverness (5.97) and York (5.95) are the least affordable cities outside southern England.
As expected there is a considerable difference in northern and southern cities with the north-south divide prevalent. The sixteen most affordable cities in the UK are all in the North and the fifteen least affordable cities to live in are all in the South.
Suren Thiru, housing economist at Lloyds TSB, commented:
“The improvement in housing affordability within many of our major urban conurbations has been significant during the past few years and reflects the decline in house prices over the period. There is, however, a distinct north-south divide to the locations of the most affordable UK cities.”
“Looking forward, the marked improvement in city affordability is likely to help support demand for those able to enter the housing market. Much of this benefit, however, maybe offset by the continuing difficulties many households face in raising a deposit and uncertainty over the outlook for the UK economy.”
Other Key Findings:
- City house prices, as a multiple of earnings, remain higher than a decade ago at 5.5 times gross annual average earnings on average compared with 4.7 in 2002.
- In 2002, Bradford was the most affordable UK city (2.73), followed by Hull (2.86) and Durham (3.02). In contrast, Oxford was the least affordable UK city (8.61).
- Thirteen of the twenty most affordable UK cities in 2012 were also among the twenty most affordable in 2002. Seventeen of the twenty least affordable UK cities were among the twenty least affordable a decade ago.