The affordability gap between average house prices and average salaries has reached its widest since the credit crisis, according to a new report from Lloyds Bank.
Home affordability in cities is at its worst level since 2008, with house prices rising as a multiple of average annual earnings from just 5.5 in 2012 to 6.9 in 2017.
The study examined 61 different cities. Oxford topped the list as the UK’s least affordable city, boasting homes which cost as much as 11 times the average local salary. London came in second place, followed by Winchester, with Cambridge and Chichester completing the top five.
In contrast, Scotland’s Stirling was found to be the UK’s most affordable city, with the average house price there just 3.7 times local earnings.
Over the last five years London saw the fastest house price growth, with the average price standing at £467,001 following a 57 per cent rise. However, over the last decade St Albans, a popular commuter town in Hertfordshire, took the crown. The average house price in the area is now £515,889 following a 65 per cent gain over the last 10 years.
However, Lloyds claimed that the average house price-to-earnings ratio in London in fact disguises variations across from borough to borough, with central London boroughs being significantly less affordable than the capital as a whole.
The report quotes: ‘Affordability levels have worsened for four consecutive years as average city house prices continue to rise more steeply than average wage growth. House prices in the south have generally seen stronger growth than in the North. St Albans has recorded the biggest gains over the past decade, whilst London has been the top performer during the recovery.’