UK city house prices continue to outpace wage inflation

Despite concerns regarding the UK property market, a report by Lloyds Bank cast a very interesting light on the sector. Over the last five years the average UK city house price has increased by 37% to a staggering £248,000. Over the same period, average city earnings have increased by just 11% to £34,000. As a consequence, it is becoming more apparent that many cities in the UK are unaffordable for first-time buyers.

Least affordable cities in the UK

While the average city property price to earnings ratio is now around 7.2 there are many cities in the UK in double-digits. The five least affordable cities in the UK are:-

1. Oxford at 12.6 times earnings
2. Chichester at 11.5 times earnings
3. Winchester at 11.3 times earnings
4. Truro at 11.1 times earnings
5. Greater London at 10.3 times earnings

The average Oxford property is now valued at £460,000 with Greater London fifth on the list at £503,000. There is despite a fall in London property prices, relative to the rest of the UK market, as a consequence of Brexit. However, this report shows that London is still a very important property market in the UK.

Most affordable cities in the UK

It will come as no surprise that you need to look well away from London and the South East to find the most affordable properties in the UK. They include:-

1. Derry-Londonderry at 4.4 times earnings
2. Stirling at 4.4 times earnings
3. Newry at 4.5 times earnings
4. Bradford at 4.6 times earnings
5. Lancaster at 4.7 times earnings

It is not difficult to see that the North-South divide is still alive and kicking with regards to UK property prices. There have been signs that the gap is reducing in areas such as the North West and the Midlands but for many areas of the UK the gap is still widening.

Urban population increasing

To add more meat to the bone, many experts believe that the urban population will continue to grow faster than those outside of the U.K.’s major cities. Indeed, by 2050 expectations are that two out of every three people will live in one of the U.K.’s major cities. This is likely to see yet more upward pressure on UK city prices despite the fact there is “better value” elsewhere.

The fact is that inner city employment markets will continue to grab the lion’s share of new employment opportunities. Success breeds success where businesses are concerned with supply chains following where businesses prosper. It is therefore safe to assume that despite successive government promises of significant capital investment outside of London and the South-East, these employment markets will continue to lead the way.


It is human nature that people will follow the job market and the job market is mainly contained within inner cities. While it is fair to say that employment markets today are more mobile and more people do work from home, there is still a great dependency on inner cities. As a consequence, even though areas of the North of England, Scotland, Northern Ireland and Wales may offer “better value”, the lion’s share of interest will always focus on London and the South-East.

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