London no longer in UK's top five least affordable cities

11 August 2021, 07:35 | Updated: 11 August 2021, 08:08

London dropped out of the UK's top five least affordable cities
London dropped out of the UK's top five least affordable cities. Picture: Alamy
Nick Hardinges

By Nick Hardinges

Winchester is now the least affordable city in the UK to buy a home following a surge in house prices.

The Hampshire city replaced last year's table-topper Oxford, with homes in Winchester now 14 times higher than the annual earnings for people who live and work there.

At the other end, Northern Ireland's Londonderry held its position as the country's most affordable city for the third year running, with a price-to-earnings ratio of 4.7.

Meanwhile, London dropped outside the top five least affordable cities for the first time in six years - the capital now sits at eighth.

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Winchester is now the least affordable city in the UK to buy a home
Winchester is now the least affordable city in the UK to buy a home. Picture: Alamy
Londonderry is now the most affordable UK city to buy a home
Londonderry is now the most affordable UK city to buy a home. Picture: Alamy

The findings came following analysis by banking company Halifax, which revealed that buying a home in a UK city will typically cost a buyer by more than eight times average earnings. Last year, the figure was around 7.5 times.

It also found that there had been a 10.3 per cent surge in city house prices over the past year, with the average propert setting a buyer back £287,440.

But that increase has not been matched by average earnings, which have only increased by 2.1 per cent annually - the equivalent of £35,677.

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After sitting at 5.6 from 2011 to 2013, the house price-to-earnings ratio in UK cities has increased for eight years in a row.

However, cities still tend to be marginally more affordable than the UK as a whole, which has a house price-to-earnings ratio of 8.5.

Wages in cities are often higher than in rural areas and, during the coronavirus pandemic, many city dwellers have relocated to the countryside, which has helped push up house prices there.

Meanwhile, housing affordability improved in seven cities this year: Oxford, Carlisle, Portsmouth, Durham, Salford, Inverness and Glasgow.

London dropped outside the top five least affordable cities for the first time in six years
London dropped outside the top five least affordable cities for the first time in six years. Picture: Alamy

Likewise, Carlisle and Aberdeen are now both more affordable than they were five years ago, with their house price-to-earnings ratios easing.

Inverness is the only city found to be more affordable than 10 years ago due to wage growth there outstripping house price growth.

Russell Galley, managing director, Halifax, said: "Affordability is significantly better in the north and there are now just two cities - Plymouth and Portsmouth - with better than average affordability in the south."

So where are the most and least affordable cities for homes in the UK?

Here are the top 10 most affordable cities in 2021, according to Halifax, with the price-to-earnings ratio, followed by the average house price and average annual earnings:

1. Londonderry, Northern Ireland, 4.7, £155,917, £33,138

=2. Carlisle, North, 4.8, £163,232, £34,087

=2. Bradford, Yorkshire and the Humber, 4.8, £164,410, £34,219

=4. Stirling, Scotland, 5.4, £208,927, £38,744

=4. Aberdeen, Scotland, 5.4, £205,199, £38,016

=4. Glasgow, Scotland, 5.4, £196,625, £36,205

7. Perth, Scotland, 5.5, £203,229, £36,700

=8. Inverness, Scotland, 5.6, £191,840, £34,373

=8. Hull, Yorkshire and the Humber, 5.6, £156,424, £27,730

10. Dundee, Scotland, 5.8, £181,150, £31,344

Inverness is the only city found to be more affordable than 10 years ago
Inverness is the only city found to be more affordable than 10 years ago. Picture: Alamy

Here are the top 10 least affordable cities in 2021, according to Halifax, with the price-to-earnings ratio, followed by the average house price and average annual earnings:

1. Winchester, South East, 14.0, £630,432, £45,059

2. Oxford, South East, 12.4, £486,928, £39,220

=3. Truro, South West, 12.1, £356,788, £29,558

=3. Bath, South West, 12.1, £476,470, £39,508

5. Chichester, South East, 12.0, £446,899, £37,352

6. Cambridge, East Anglia, 11.9, £482,300, £40,492

7. Brighton and Hove, South East, 11.6, £449,243, £38,737

8. London, South East, 11.0, £564,695, £51,257

=9. St Albans, South East, 10.2, £604,423, £59,391

=9. Chelmsford, South East, 10.2, £424,690, £41,781