Over four in five UK cities see home affordability improve since 2009

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1 This is the annual Lloyds Bank Affordable Cities Review and tracks housing affordability in 62 cities (including Greater London) across the UK. The review is based on Lloyds Banking Group's own housing statistics database and the Office for National Statistics (ONS). Earnings figures used are for the relevant local authority district of each city (see editor's notes). Over four in five UK cities see home affordability improve since 2009 Affordability improves since the house price peak in 2008, but rising house prices mean affordability has deteriorated in the last year North-south divide remains when it comes to affordability Oxford is the UK s least affordable city Home affordability in UK cities has improved in 51 of 62 cities in the last five years, according to the Lloyds Bank Affordable Cities Review. The average price for a city home in the UK stands at 184, times gross annual average earnings, down from 6.1 in 2009 and just under 20% below the peak of 7.2 in The past year has seen a deterioration in affordability in cities, driven by rising house prices across the country. The average UK city house price has risen by just over 5%, from 175,060 in 2013 to 184,215 in This has resulted in overall affordability slightly worsening in the last 12 months from 5.6 to 5.8 times gross average earnings. Over the last five years, the slight increase in affordability across UK cities as a whole is caused by an average house price decline of 827, and an increase in the gross average annual earnings in those cities of 1,292. North-south divide in city affordability A clear north-south divide still remains among UK cities. The top 15 most affordable cities for homebuyers are in Scotland, Northern Ireland or the North of England, and the next five on the list are in the Midlands or Wales. At the other end of the spectrum, the 17 least affordable cities are all in southern England, with Lichfield, Leicester and York completing the top 20. However, the top ten UK cities with the highest house price growth in the last decade, eight are in Scotland or the north. Scottish cities top the list, with Aberdeen (94%), Dundee (60%) and Inverness (46%) seeing the biggest changes. In England, Carlisle, Hull and Bradford all saw their house prices rise by 40% or more since City affordability is now better than 10 years ago City house prices are now lower than a decade ago as a multiple of earnings, at 5.8 times gross annual average earnings compared with 5.9 in In this time, 1 of 5

2 average city house prices have increased by 22%, but average earnings in these cities have increased slightly more, by 23%. Living in the city is also more affordable than across the UK as a whole, as the UK average house price to earnings ratio stands at 5.9, compared to 5.8 in UK cities. This is driven by higher wages earned in UK cities, as house prices in UK cities are on average 7% ( 12,730) higher than their respective county averages. Stirling is now the most affordable UK city Stirling has overtaken Londonderry as the UK s most affordable city, with an average property price ( 132,734) that is 3.3 times gross average annual earnings. As a result of lower house prices, cities in Northern Ireland also continue to rank as among the most affordable in the UK, with Londonderry (3.56), Newry (3.90) and Belfast (4.12) following Stirling in the list. The most affordable city in England is Bradford at Oxford continues to be the UK's least affordable city Rising property prices in the last 12 months mean that cities in southern England dominate the least affordable rankings. Oxford s average house prices are now over 11 times (11.25) the gross average earnings in the city. At an average price of 340,864, houses in Oxford are relatively more expensive than the average earnings in the city, partly due to Oxford s attractiveness to commuters working in London. Last year, Oxford s affordability was Winchester (9.65), Truro (8.57), Bath (8.05) and Brighton and Hove (7.94) make up the top five least affordable cities. Lichfield (6.13) Leicester (6.07) and York (5.98) are the least affordable cities outside southern England. Marc Page, Lloyds Bank mortgages director, commented: Over the last five to ten years, affordability has marginally improved in most UK cities, as increases in earnings have kept up with house price rises in that time. However, the economic and lifestyle benefits often associated with residing in cities are continuing to drive demand, especially in the south of England. With city house prices continuing to rise, affordability deteriorated slightly last year, but the trend since 2009 is positive for the majority of UK cities. Table 1: 20 most affordable UK cities, 2014 UK cities Region PE ratio Stirling Scotland 3.30 Londonderry Northern Ireland 3.56 Newry Northern Ireland 3.90 Belfast Northern Ireland 4.12 Bradford Humber 4.15 Lancaster North West 4.28 Lisburn Northern Ireland 4.29 Salford North West of 5

3 Glasgow Scotland 4.51 Durham North 4.60 Hull Humber 4.64 Sheffield Humber 4.72 Sunderland North 4.76 Liverpool North West 4.77 Manchester North West 4.78 Hereford West Midlands 4.78 Swansea Wales 4.79 Birmingham West Midlands 4.85 Derby East Midlands 4.85 Stoke On Trent West Midlands 4.85 UK cities average 5.84 Source: Halifax, 12 months to January Table 2: 10 least affordable UK cities, 2014 UK cities Region PE ratio Oxford South East Winchester South East 9.65 Truro South West 8.57 Bath South West 8.05 Brighton And Hove South East 7.94 Chichester South East 7.71 Westminster Greater London 7.60 Salisbury South West 7.40 Cambridge East Anglia 7.32 Southampton South East 7.15 Exeter South West 6.95 Bristol South West 6.82 Canterbury South East 6.75 Norwich East Anglia 6.69 St Albans South East 6.53 Chelmsford South East 6.39 Portsmouth South East 6.20 Lichfield West Midlands 6.13 Leicester East Midlands 6.07 York Humber 5.98 UK cities average 5.84 Source: Halifax, 12 months to January 3 of 5

4 Table 3: UK Cities with Highest House Price Growth, City Region Average House Price 2004 ( ) Average House Price 2014 ( ) 10 year % change Aberdeen Scotland 104, ,120 94% Dundee Scotland 85, ,564 60% Inverness Scotland 107, ,902 46% Carlisle North 102, ,342 44% Winchester South East 278, ,764 43% Hull Humber 80, ,074 42% Bradford Humber 81, ,445 40% Perth Scotland 116, ,054 37% Brighton And Hove South East 202, ,007 36% Stoke On Trent West Midlands 96, ,396 29% Source:Halifax * 12 months January -ends- For further information Chris Tuttlebee / christopher.tuttlebee@lloydsbanking.com Siobhan McCluskey / Siobhan.McCluskey@lloydsbanking.com Notes to Editors: 62 cities surveyed. City of London, Wells, Armagh, Ripon, St Davids, St Asaph and Bangor have been excluded from the analysis due to an insufficient sample size. A city is typically defined as 'a large town' or 'any town in the UK which has a cathedral'. However, there are notable exceptions to this including towns that were awarded city status to mark special occasions. For example, Chelmsford, Perth and St Asaph were awarded city status as part of Golden Jubilee celebrations. For more information please visit: The prices used in this research are simple arithmetic ('crude') averages. These prices are not standardised and therefore can be affected by changes in the sample from period to period. The data used in the release largely refers to the 12 months to January. Data sources: This research is based on data from the Lloyds Banking Group's own housing statistics database and ONS data on average earnings. 4 of 5

5 1. House Prices The prices used in this research are simple arithmetic ('crude') averages. These prices are not standardised and therefore can be affected by changes in the sample from period to period. The data used in the release largely refers to the 12 months to January. Sources: Halifax House Price database. 2. Average Earnings Average earnings figures are estimated from the ONS's "Annual Survey of Hours and Earnings" (ASHE) and refer to the means for full-time employees. At a city level, figures for the relevant local authority (residence based) are used in the majority of cases. Where this has not been possible due to data unavailability, the nearest local authority average has been used. Crown copyright material reproduced with the permission of Registers of Scotland "This report is prepared from information that we believe is collated with care, however, it is only intended to highlight issues and it is not intended to be comprehensive. We reserve the right to vary our methodology and to edit or discontinue/withdraw this, or any other report. Any use of this report for an individual's own or third party commercial purposes is done entirely at the risk of the person making such use and solely the responsibility of the person or persons making such reliance. Lloyds Bank plc all rights reserved 2014." 5 of 5