Norwich One Of The Least Affordable Cities
27 March 2015, 06:56 | Updated: 27 March 2015, 07:07
The cost of a typical home in a UK city is at its most unaffordable level since 2009 as buyers face stretching their wages further to keep up with rising property prices, a report has found.
A city home now costs 6.1 times gross average annual earnings, up from a multiple of 5.8 times average earnings 12 months ago, as the housing market recovery has spread across the country, Lloyds Bank found.
It said that affordability in UK cities was now back to the same level as in 2009, although it was still lower than at the peak of the housing boom in 2008, when the average property cost 7.2 times earnings.
Oxford is the UK's least affordable city, with the average house price standing at £361,469, nearly 11 times the local wage.
Norwich came 14th on the list with average homes costing 6.88 times salaries.
Winchester, Cambridge, Chichester and Brighton and Hove completed the top five least affordable cities list.
In Winchester and Cambridge, homes cost around 10 times local earnings, while in Chichester and Brighton and Hove they cost more than nine times earnings.
Greater London comes not far behind, with a home there costing around 8.75 times average earnings in the capital.
With an average price of #158,645, Stirling remains the UK's most affordable city, with a property there costing around 3.9 times gross average annual earnings, according to Lloyds' Affordable Cities Review.
The findings were made as a separate report from property analysts Hometrack found that cities such as Belfast, Leeds, Liverpool and Cardiff all registered a strong growth in house sales in 2014 compared with their average for the previous five years.
Hometrack said that rising sales volumes were an important indication of house prices being poised to push up.
Meanwhile, compared with 2013, cities such as Cambridge, Aberdeen, Oxford and London which have all already seen a strong increase in house prices as the recovery has taken hold, saw the volume of sales slow down in 2014, Hometrack said.
As buyers in these cities reached the limits of what they could afford to pay, Hometrack said the falling sales volumes in these cities were now feeding into a slowing in the rate of price growth.
Lloyds said that house prices in Aberdeen had already shot up by 88% over the last decade - the biggest price gain of any UK city.
More recently, London has been the top house price performer, with strong interest from wealthy overseas investors looking for a safe haven for their cash as the economic downturn took hold.
The average London property has seen its value increase by 40% over the last five years.
Andy Hulme, Lloyds Bank mortgages director, said: "House price rises in the past two years have resulted in a deterioration in 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.''
Housing minister Brandon Lewis said: "Our efforts to get the country building again are working.
"Thanks to this Government's long-term economic plan, we have delivered 700,000 new homes since the end of 2009, planning permissions were granted on 253,000 new homes last year and we've delivered over 217,000 affordable homes since 2010.
"Our affordable housing programme aimed to deliver 170,000 homes from 2011 to 2015 and we are well on track to exceeding this.
"We're determined that anyone who works hard and wants to get on the property ladder has the help they need to do so.
"That's why over 204,000 households have bought or reserved a new home through government-backed schemes in the last five years, and we've announced a new Help to Buy Isa to help aspiring homeowners save for a deposit on their first home with contributions from the government.''