The disparity between average earnings and house prices has reached record levels in certain parts of the country, the latest Hometrack UK Cities Index for October reveals.
Perhaps unsurprisingly, a lack of supply and strong demand for housing in London has pushed house prices up 86% since 2009, meaning the capital now has a house price to earnings ratio of 14.2x, according to the report.
This is based on an average house price in London of £482,800 and average earnings of £33,720 in the capital. This is the largest in the UK and more than double the UK ratio of 6.5x.
Cambridge and Oxford also have double digit price to earnings ratios at 13.8x and 13.4x respectively.
Meanwhile Bristol, which has had the fastest house price growth in the past two years to £259,400, now has a price to earnings ratio of 9.2x earnings. Three cities have price to earnings ratios that are below the average: Glasgow (3.7x), Liverpool (4.4x) and Newcastle 4.8x).
Overall house price inflation for the top 20 top UK cities was registered at 8.4% at £241,200, while it was up 7% across the UK to £203,700.
Richard Donnell, insight director at Hometrack, said: “The impetus for house price growth is shifting from the affordability constrained cities in southern England to cities in the midlands and the north of England. Regional cities have more attractive affordability levels and house prices have significant potential upside for growth in the near term subject to the outlook for the economy.
“In cities where affordability levels are stretched, fewer households are able to participate in the market and this reduces levels of turnover and leads to lower levels of house price growth. This process is under way in London where the annual rate of growth is close to its lowest level for three years and where the top end of the market is already registering falling prices.
“The Autumn Statement focused on the longer-term challenges of addressing housing supply. This will have limited impact on the current profile of housing affordability in the near term which will be dictated by market forces and households’ expectations for jobs and the cost of borrowing.”
See how your region fares in the tables below.
Average earnings and price to earnings ratio
| City | Average weekly earnings 2016(1) | Price to earnings ratio – current | Long run average (2002-16) |
| London | £33,720 | 14.2 | 9.6 |
| Cambridge | £30,633 | 13.8 | 9.5 |
| Oxford | £30,633 | 13.4 | 10.4 |
| Bournemouth | £26,473 | 10.2 | 9.0 |
| Bristol | £28,007 | 9.3 | 7.2 |
| Southampton | £27,245 | 8.0 | 6.8 |
| Portsmouth | £28,074 | 7.8 | 6.9 |
| Cardiff | £27,633 | 6.9 | 6.5 |
| Edinburgh | £29,104 | 6.9 | 6.5 |
| Aberdeen | £28,824 | 6.3 | 5.7 |
| Leicester | £25,343 | 6.2 | 5.7 |
| Manchester | £26,310 | 5.6 | 5.2 |
| Birmingham | £25,888 | 5.6 | 5.4 |
| Leeds | £27,492 | 5.6 | 5.6 |
| Nottingham | £26,530 | 5.2 | 5.0 |
| Sheffield | £25,745 | 5.0 | 4.8 |
| Newcastle | £25,698 | 4.8 | 5.1 |
| Liverpool | £25,503 | 4.4 | 4.7 |
| Glasgow | £30,304 | 3.7 | 4.1 |
Average earnings and price to earnings ratio
| City | Average price | % yoy October 2016 | % uplift from post 2008 low |
| Bristol | £259,400 | 10.6% | 61% |
| London | £482,800 | 9.1% | 86% |
| Portsmouth | £218,600 | 8.3% | 42% |
| Cardiff | £193,000 | 8.0% | 32% |
| Birmingham | £145,500 | 7.7% | 25% |
| Manchester | £148,100 | 7.7% | 25% |
| Southampton | £218,200 | 7.5% | 42% |
| Oxford | £415,000 | 7.0% | 72% |
| Bournemouth | £271,400 | 6.9% | 42% |
| Nottingham | £138,300 | 5.6% | 27% |
| Liverpool | £112,700 | 5.5% | 15% |
| Sheffield | £129,300 | 5.5% | 18% |
| Leeds | £153,100 | 5.5% | 21% |
| Cambridge | £420,600 | 5.4% | 84% |
| Leicester | £156,500 | 5.4% | 28% |
| Glasgow | £114,700 | 4.0% | 13% |
| Edinburgh | £203,200 | 3.5% | 20% |
| Newcastle | £122,600 | 3.1% | 12% |
| Belfast | £126,700 | 2.1% | 22% |
| Aberdeen | £180,500 | -8.1% | 15% |
| 20 city index | £241,200 | 8.4% | 52% |
| UK | £203,700 | 7.0% | 33% |
I am really sad for finding property related statistics fascinating?
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That should have read;
Am I really sad for finding property related statistics fascinating?
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