Local affordability special report: where are the most & least affordable areas in each region?

Commenting on the figures, Andrew Harvey, Senior Economist, said:

“Our recent Affordability Report identified there had been a significant widening in the gap between the least affordable and most affordable regions. However, there is also considerable variation within regions and in this special report we explore this further.

“We’ve developed a range of affordability metrics at local level using house price data and earnings data from the Land Registry & Office for National Statistics (ONS) to give the most comprehensive view at a local level.

Least affordable local authorities in each region

“The table below shows the least affordable local authority, as measured by the first time buyer house price to earnings ratio (HPER) within each government office region (using data for 2020). Note that data is not available for Northern Ireland.

Govt Office Region	Local Authority	HPER (2020)
London	Kensington and Chelsea	16.8
East of England	Hertsmere	9.6
South East	Oxford	9.2
South West	Bath and North East Somerset	8.1
East Midlands	Rutland	6.6
Yorkshire and The Humber	Ryedale	6.5
West Midlands	Redditch	6.3
North West	South Lakeland	6.3
Wales	Cardiff	5.9
Scotland	City of Edinburgh	5.4
North East	North Tyneside	4.1

“Predictably, the least affordable local authority in London, and by extension Great Britain, is Kensington and Chelsea, where the typical house price is 16.8 times earnings. Perhaps unsurprisingly, it is also the most expensive local authority in the country and the only one where the average price exceeds £1 million.

“Hertsmere in Hertfordshire is the least affordable local authority in the East of England government region, with average prices 9.6 times average earnings in the area. This area is traditionally prime London commuter territory, taking in towns such as Borehamwood and Potters Bar.

“Oxford, ‘the City of Dreaming Spires’, is the least affordable area in the South East region, while historic Bath and North East Somerset has the highest house price to earnings ratio in the South West.

“Rutland, the smallest historic county in England, is the least affordable authority in the East Midlands, while in the West Midlands it is Redditch, which is around 15 miles south of Birmingham.

“In Yorkshire and The Humber, the district of Ryedale in North Yorkshire has the highest house price to earnings ratio. This predominately rural area includes towns such as Malton and Pickering.

“The least affordable area in the North West government region is South Lakeland in Cumbria, which includes parts of the popular Lake District national park, including Ambleside and Windermere.

“In Wales and Scotland, the respective capital cities see strong demand for housing and have the highest house price to earnings ratios.

“North Tyneside is the least affordable area within the North East, though average prices are only around four times average earnings, so this is still relatively affordable compared to some of the other locations in our list. The North East region also has the smallest gap between the least and most affordable authorities.

Most affordable local authorities in each region

“We’ve also looked at the most affordable areas, identifying the local authority areas with the lowest first time buyer house price to earnings ratio within each region.

Govt Office Region	Local Authority	HPER (2020)
Scotland	East Ayrshire	2.3
North West	Copeland	2.5
North East	County Durham	2.7
Wales	Merthyr Tydfil	3.2
West Midlands	Stoke-on-Trent	3.2
Yorkshire and The Humber	North East Lincolnshire	3.3
East Midlands	Bolsover	3.7
East of England	Great Yarmouth	4.5
South West	Swindon	5.1
South East	Dover	5.5
London	Bromley	6.7

“The most affordable local authority in Britain is East Ayrshire, in Scotland, where average first time buyer house prices are just 2.3 times average earnings. East Ayrshire covers a large geographic area to the south of Glasgow, but its main towns are Kilmarnock and Cumnock.

“Copeland is the most affordable area in the North West of England. While the area includes parts of the western Lake District, its main settlements are along the Cumbrian coast from Millom to Whitehaven.

“In the North East, County Durham has the lowest house price to earnings ratio at 2.7. Covering a relatively large area, it is quite mixed and includes the cathedral city of Durham, former mining towns such as Bishop Auckland, and ‘new towns’ Peterlee & Newton Aycliffe.

“Merthyr Tydfil is the most affordable local authority in Wales. The town has a rich industrial heritage and average house prices are amongst the lowest in the principality.

“In the West Midlands, Stoke-on-Trent has the lowest house price to earnings ratio, while in the East Midlands it is the district of Bolsover.

“North East Lincolnshire is the most affordable area in the Yorkshire and The Humber government office region. This area includes Humber Estuary towns, such as Grimsby, Cleethorpes and Immingham.

“Meanwhile, further south on the east coast, Great Yarmouth in Norfolk has the lowest house price to earnings ratio in the East of England region.

“Swindon is currently the most affordable area in the South West, with a house price earnings ratio of 5.1. Prices in Swindon tend to be lower than some of the surrounding areas in part due to relatively high levels of new housing construction as the town has continued to expand.

“In the South East government region, the district of Dover has the lowest house price to earnings ratio, with average first time buyer prices 5.5 times average earnings. As well the port town itself, this area also includes Sandwich and Deal.

“Bromley is the most affordable borough in London, though its house price earnings ratio of 6.7 is still higher than most local authorities across the country. Indeed, Bromley is less affordable than the least affordable authorities in seven out of the 11 regions. London also has by far the greatest gap between the least and most affordable boroughs.

Which areas have seen the greatest improvement in affordability?

“The table below shows the areas that have seen the biggest improvement in housing affordability over the past five years, by comparing the first time buyer house price to earnings ratios in 2015 and 2020.

Govt Office Region	Local Authority	HPER 2015	HPER 2020	Chg. (ppts)
London	Hammersmith & Fulham	15.6	11.5	-4.1
Scotland	Aberdeen City	4.7	3.2	-1.5
South West	Torridge	6.2	5.3	-0.9
East of England	Brentwood	5.7	5.1	-0.7
Yorkshire and The Humber	Harrogate	6.0	5.3	-0.7
North East	Middlesbrough	3.5	2.9	-0.6
West Midlands	Solihull	5.2	4.6	-0.6
South East	Oxford	9.8	9.2	-0.5
North West	Carlisle	4.0	3.5	-0.5
Wales	Gwynedd	4.8	4.4	-0.5
East Midlands	Oadby & Wigston	5.4	5.0	-0.4

“The London borough of Hammersmith & Fulham has seen the biggest improvement in affordability over the period, with the average FTB house price to earnings ratio falling from 15.6 to 11.5. This was driven by a combination of lower prices (12% lower than five years ago) and higher earnings (up 17% compared with 2015).

“In Scotland, the city of Aberdeen has seen the greatest improvement in affordability, with average FTB HPER declining from 4.7 to 3.2 in the last five years. This is predominately due to the 28% fall in average prices over the period, though incomes have also risen by 7%.

“In the South West, the district of Torridge in North Devon has seen its HPER improve from 6.2 to 5.3. This appears to be due to strong growth in earnings over the period, which were 32% higher compared with 2015.

“Affordability gains in other regions have been more modest. Overall, 25% of local authorities in Great Britain have seen an improvement in affordability compared with 2015, while FTB house price earnings ratios have risen in 73% of authorities, with the balance unchanged.

“The chart (see attached) shows the distribution of local FTB house price to earnings ratios and how this has changed since 2015. While there is quite a wide range, there has been a noticeable increase in the proportion of local authorities with higher HPERs over the last five years. Around 40% of authorities now have a HPER of 6 or more, compared with 28% in 2015. Similarly, only 30% of localities now have a HPER below 4.5, down from 40% five years ago.

“This helps to illustrate the challenge that many first time buyers across the country face, in terms of raising a deposit to purchase their first home. However, the low level of interest rates means that the cost of servicing a mortgage as a share of take home pay is actually below the long run average in most parts of the country. To read more about this, please see our previous affordability report. 

“Affordability data for all local authorities, alongside all of our usual monthly and quarterly reports can be found at www.nationwidehousepriceindex.co.uk. Each month, the reports and data will be published on this new site, with our February report due to be released on 2 March.”