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Over the past year, the average house price of UK cities has grown by 10.3%, while average earnings for those living and working in cities rose just 2.1%. As a result, the average home in a UK city now costs 8.1 times average earnings (known as the Price to Earnings, or PE, ratio), according to Halifax, the UK’s biggest mortgage lender.
Halifax’s analysis of average house prices and earnings, in the 12 months to June 2021, has identified the most and least affordable of 61 UK cities. The research shows that, while city house prices rose to £287,440, up 10.3%, wages in the same locations only rose by 2.1% to £35,677.
This increased gap between house prices and earnings has lifted the PE ratio to 8.1, from 7.5 in 2020, meaning buying a city home has become less affordable for those that live and work in them. After sitting at 5.6 from 2011 to 2013, the PE ratio for UK cities has now risen for eight successive years.
Perhaps contrary to some perceptions, overall cities are marginally more affordable than the average for the UK as a whole, which has a PE ratio of 8.5 (UK average house price: £327,691, average earnings: £38,600). This pattern of greater city affordability has been visible in the data since 2014, and in 2021 the gap between PE for cities and all UK homes increased to its widest point, of 0.43. This widening over the last 12 months may reflect home-movers looking for more space to accommodate homeworking during the pandemic.
The ratio between the average city house price and average earnings has increased from 5.6 to 8.1 over the past decade.
Enjoy your shitty newbuild box, peasants.