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Recent research from Zoopla has revealed that the affordability of houses in major towns and cities seems to be improving. However, there is variation in this trend, with some urban centres showing greater price slowdown than others.
In London, the ratio of house price-to-earnings has dropped from a high of 14.1 two years ago to a current level of 13.1. The house price-to-earnings ratio is a measure of the average house price in an area divided by the average earnings, hence the figure of 13.1 means that the average price of a home in London is some 13.1 times the average salary of workers in the capital.
Consequently, this can be used to establish how affordable homes and houses are to those who live there.
Currently, the most affordable property can be found north of the border in Glasgow, where the average house price of £124,800 is just 3.7 times the average worker’s salary. This is followed closely by the three major English cities of Liverpool, Sheffield and Newcastle, where the house price-to-earnings ratios sit at 4.4, 4.9 and 4.5 respectively.
Taken overall, the average cost of a home in a UK city is currently 6.7 times the typical local salaries, while the 20-year average is 5.8. Looking at the data supplied by Zoopla, this means that the house price-to-earnings ratio in Aberdeen, Nottingham, Belfast, Leeds, Birmingham, and Manchester are all more affordable now than they were in 2007. Leicester’s ratio increased marginally from 6.3 to 6.4
On the other hand, the Zoopla data reveals that nine major British towns and cities still have an above-average ratio, including Cambridge, Oxford, Bournemouth, Bristol, Portsmouth, Southampton, Edinburgh and Cardiff. Needless to say that the capital tops the chart as outlined above.
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