British banking institution Halifax has revealed the least affordable local areas in the UK to buy a house – and its confounded the presumption that homebuying budgets go least far in London.
It turns out, according to the bank’s research, that eight out of the top ten worst value places to buy a house in the UK are actually outside the capital.
Kensington & Chelsea – 3rd – and Epping Forest – 10th – are the areas of Greater London that make it into the list, but after that the capital isn’t represented at all.
However, the least affordable local areas are all in and around the capital. Elmbridge in Surrey tops the list, followed by St Albans in Hertfordshire.
Waverley in Surrey follows Kensington & Chelsea, and after that its Sevenoaks in Kent. Sixth is Mole Valley, also in Surrey, and seventh is Windsor and Maidenhead in Berkshire.
Hertsmere in Hertfordshire is next, followed by Guildford in Surrey. Bringing up the rear is Epping Forest which has been classified as Greater London but cuts across the border with Essex.
“Housing affordability has improved over the past year, thanks to stabilising property prices, strong wage growth, and easing interest rates,” Amanda Bryden, head of Halifax Mortgages, said.
“However, while homes are becoming more affordable, the progress has been gradual. Buying a property remains a significant challenge for many, with prices still near record highs and interest rates likely to stay higher than we’ve been used to over the past decade.”
The best value places in the UK according to Halifax are found in the north of England, the Midlands, or Scotland.
Topping the list is Kingston upon Hull in East Yorkshire, followed by Burnley and Blackpool – both in Lancashire.
Besides South Tyneside in the north-east of England and Stoke-on-Trent in the West Midlands, the rest of the list is populated by places in Scotland.
West Dunbartonshire, Dumfries and Galloway, East Ayrshire, and Dundee all make it into the top ten.
House price affordability is worked out using the ratio of an area’s average yearly salary and average house price. The lower the ratio for a particular area, the more affordable it is to buy a house there.
So, in Greater London, average earnings are £65,628 a year, while the average house price is £539,238. That puts the income: earnings ratio at 8.22.
Meanwhile, in the north-east of England, the average house price is £171,338, while wages average at £39,138 a year. This puts the income:earnings ratio at 4.38.