Houses in Britain’s most expensive cities have returned to levels of affordability not seen since 2015, according to new data released this morning.
Weak house price growth and rising wages have boosted the chances for those wanting to buy houses in the country’s priciest cities, according to the latest UK Cities House Price Index by Zoopla.
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In London, the average house price of £483,100 is 13 times higher than the average wage, falling from a high of 14.1 times two years ago and marking the lowest house-price-to-earnings ratio level since June 2015.
Richard Donnell, research and insight director at Zoopla, said: “Housing affordability is slowly starting to improve in London as earnings growth outstrips house price inflation. There has been a clear downward trend in the ratio of house prices to average earnings over the last 2 years.
“However, the scale of improvement is relatively modest. While we welcome news, the gap between earnings and prices needs to close further in order to make a material difference to would be purchasers.”
The results also show the affordability of housing to vary widely across the UK from a high of 13 times the average salary in London to a low of 3.7 times in Glasgow.
According to Zoopla, two of the most expensive cities also registered house price falls, with prices falling 0.4 per cent in Oxford and 4.8 per cent in Aberdeen.
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Jeremy Leaf, north London estate agent and a former RICS residential chairman, told City A.M. that there is now some “realism entering the market” and that “in some areas, the market is rebalancing between supply and demand”.
He said: “These figures show that affordability has improved in many areas where it was previously stretched, particularly in places of oversupply such as London. As well as this, improved stability in employment has, to some extent, been outweighing the uncertainty for buyers, caused by Brexit.”