In 2007, Britain was on the precipice of a financial crash. Ten years on, which areas are more and less affordable, when house prices are set against local earnings?
By Debbie WhiteOctober 12, 2017 00:00
What’s the latest?
New research has identified areas in Britain that have become either kinder or crueller on the wallet in the 10 years since the credit crunch began to take hold.
Yorkshire Building Society found that 54% of local authority areas are better for buying property in (more affordable now than they were before the financial crash), while 46% are worse (less affordable now than before the crash).
At a national level, affordability in Britain has improved marginally by 0.6% overall. Affordability has improved by 18.9% in Scotland and 17.2% in Wales. In England however, it has declined by 3.3%.
Affordability is determined by house prices versus local earnings.
Sounds interesting. What’s the background?
Yorkshire Building Society examined 10 years of earnings data from the Office for National Statistics. It also looked at house price data from the Land Registry for 32 London boroughs and 324 local authorities across England, Wales and Scotland. It used this to calculate average house price to earnings ratios.
In areas such as Leeds, Harrogate, Edinburgh, Peterborough and Birmingham, it found that wages increased faster than property values, making them better bargains than in the days just prior to the credit crunch.
But London and most of the south presents the least value for buyers, as house prices have risen much quicker than local wages over the past decade.
The gap between the most and least affordable parts of Britain has almost doubled since the start of the economic downturn.Above: With its 15 bedrooms in Dumbarton, Scotland, this detached home offers panoramic views over the Clyde Estuary, and is available for £650,000
Where is it most affordable to live?
You can bag the biggest property bargain in Inverclyde, near Glasgow, according to Yorkshire's research. The local authority area has experienced a 42.5% improvement in affordability over the past 10 years. The average house price in 2007 was £122,209, but now sits at £104,638, and costs 3.67 times the average salary.
You can see the remainder of the top five most affordable areas in the table below.
Where is the least affordable?
Hardest on the wallet is Hertfordshire’s Three Rivers, where affordability has plummeted by 61%. Average house prices in the local authority in 2007 were £332,891, but by this year had rocketed to £519,922. The average home in Three Rivers now costs a staggering 16 times the local average salary.
What about housing affordability in London?
Buying a home in any of the capital's boroughs is now much trickier than before the credit crunch, with affordability dropping by an average 39%. The value of an average London home today stands at more than 20 times typical local wages.
Haringey in north London saw the biggest decline in affordability since the economic crisis, with homes becoming 60.2% less affordable to buy.
And the borough of Westminster is the least affordable place in Britain. Average house prices there have rocketed from £539,759 in 2007 to a current £1,034,073.Above: On the market for £28m, is this seven-bedroom Westminster flat arranged over three floors