UK Affordability Gap Widens
Ten years on from the credit crisis, affordability levels in UK residential property have fallen back to where they were in 2007, says a report from Lloyds Bank.
Whereas buyers needed 7.2 times their income on average for a home in 2008, today they once again need a multiple of 7 times.
This gap has widened from 5.5 in 2012, thanks to a 32 per cent rise in house prices. The average cost has jumped from £169,966 five years ago to £227,926 today.
Average incomes, meanwhile, have only risen by 7 per cent in that time.
“City living is becoming increasingly expensive with average house prices at least 10 times average annual earnings in five of the UK’s cities,” noted Andy Mason at Lloyds Bank. “Affordability levels have worsened for four consecutive years as average house prices continue to rise more steeply than average wages.”
The least affordable UK cities in which to buy homes are now Oxford (10.7 times average earnings), Greater London (10.5), Winchester (10.5), Cambridge (10.3) and Chichester (10.0).
Cities in the North of England, Scotland and Northern Ireland are typically more affordable, with Sterling in Scotland (3.7 times average earnings) and Londonderry in Northern Ireland (3.8) at the top of the list.
The consistent rise in property values relative to earnings will encourage more British residents to look towards the rental market.