“The housing affordability gap has widened to its worst level in eight years,” said the Lloyds analysis, noting that the last time prices were so high was at the very top of the boom in 2008, just before the financial crisis struck.
The Lloyds analysis is unique in that it compares local house prices with local earnings rather than national averages. On this measure, the worst house prices are not in London but in other parts of the south-east.
Oxford is again identified as the least affordable city in the UK, with average prices at 10.68 times local earnings. Winchester is a close second at 10.54, with London third at 10.06.
Cambridge, Brighton and Bath all have prices that are now nearly 10 times local earnings, while cities such as Bristol and Southampton have prices close to eight times earnings.
Wage growth has fallen far behind the rise in house prices, said Lloyds, with affordability worsening for the third successive year. The average home in a city in the UK now costs 6.6 times average local earnings, up from 6.2 last year.
In the 1950s and 1960s, buyers could typically find homes with mortgages of three to four times their income. But the Lloyds figures show that there is now just one city in the UK that fits that profile: Derry in Northern Ireland. House prices in the city currently fetch 3.81 times local incomes.
While most of the “most affordable” cities in the Lloyds rankings are in the north, Scotland and Northern Ireland, buyers will still be stretched to afford a home from the local salaries on offer. Hull is widely regarded as a low house price area, yet local residents face having to pay 5.11 times average local incomes to buy a home. Meanwhile, York has joined the ranks of cities in the south in the unaffordability tables, with prices at 7.5 times incomes.
Winchester in Hampshire emerges as Britain’s No 1 property hotspot, easily surpassing the capital in terms of house price rises and unaffordability. The local council says that soaring house prices have pushed locally born people out of the city, while finding workers to fill lower-paid jobs is proving extremely difficult.
“It’s a very big challenge for the council,” says Stephen Godfrey, leader of Winchester council, where the local unemployment rate is just 0.6%. “We have more jobs here than the local working age population. Many public services jobs are not the highest salary payers, and it is difficult to find people willing to take local jobs at these wages. Of the council’s 450 staff, only half live in the district.”
House prices have grown faster in Winchester than anywhere in the UK over the past decade, said Lloyds, jumping from an average of £249,703 in 2006 to £446,796.
One eight-bed home is currently on the market for £6.5m, while new-build two-bed flats have asking prices of £595,000.
The capital of Alfred the Great’s kingdom was recently named by the Sunday Times as the greatest place to live in Britain, and boasts a Michelin-starred restaurant, the country’s first Hotel du Vin and highly rated local schools. Seven direct trains to London Waterloo leave between 7am-8am each weekday morning – but finding a seat is another matter.
Godfrey said that around 400-500 new homes a year are being built in the area, and that a new council house-building programme will provide another 120 units. But the developments will be unlikely to meet demand – or objections from existing residents, many angry at how the town is being swamped by Londoners selling up and using gains in the capital to snap up local homes.
“Everyone knows that Winchester houses are very expensive, even ‘affordable’ ones. Londoners love our beautiful city, gorgeous countryside, great rail links and it so much cheaper than London even if they commute. They can afford expensive property when they sell up in London and move here,” one resident told the Hampshire Chronicle.