Which is the UK's least affordable city?

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Londoners may find it hard to believe, but the capital isn't the UK's least affordable place to live - it's Oxford.

New research from University of Oxford geography professor Danny Doring shows that the average price of a house in the city has gone up by almost £38,000 over the last year to £426,720, over 16 times the local average income of £26,500.

Meanwhile in London, average prices have increased by £45,620 to £501,520, representing 15.7 times the average income of £31,950.

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Other areas with house price to income ratios of more than 10 include Cambridge, Brighton, Reading and Milton Keynes. But even the most affordable cities in the country have house price to income ratios that make getting a mortgage difficult: in Liverpool the ratio's 5.8, in Derby it's 6.2 and in Nottingham it's 6.8.

"Compared with earlier decades, house prices across the UK are extremely high when compared with the average take home pay," says Professor Dorling.

"The more 'affordable' parts of the country also have high ratios, that just look relatively better compared with the unprecedented expense of current housing costs in London and Oxford."

The figures were compiled from government data for a new edition of Professor Dorling's book All That Is Solid, an assessment of Britain's housing crisis, which argues that the current market is unsustainable.

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"Fewer and fewer people are able to get a mortgage as stricter tests are imposed to prevent the banks from lending as recklessly as they did before," he says.

"Meanwhile, at least a third of those with mortgages would struggle if mortgages were to rise by even a couple of percentage points at some point in future years. The further that house prices rise, the greater that proportion will grow, leaving a growing proportion of people with no option but to rent."

Oxford's big problem is a shortage of housing - the City Council reckons it needs between 24,000 and 32,000 new houses over the next 16 years - combined with a lack of space on which to build. The city's green belt is very tightly defined, and there's little space left within it.

Oxford is also seeing an influx of wealthy Londoners, attracted by the city's excellent fee-paying and state schools, and by prices that, while high, are still lower than the capital. Transport links are good, with London only an hour away by train, and with a new high-speed link due to open this summer from a station currently being built just to the north of the city.

High-end estate agent Knight Frank reports that last year more than half its sales were to people from outside the city, up from just a quarter the year before. And demand from Londoners rose by an astonishing six times to represent 18% of sales.

House prices in prime areas of the city have risen twice as fast in the last year as the rest of the UK, up by 6.1%, compared with 3.4% for the rest of the country.

Oxford City Council has just signed off its biggest house-building scheme in 20 years, which will provide 885 homes in Barton Park. Work is scheduled to start in the next few months. Other big developments are planned around the edge of the city, but are not expected to fill the housing gap.

Professor Dorling believes that nearby towns such as Didcot and Witney should also be the focus of house building, with light rail links into the city.


A firsthand experience of buying in Oxford, the least affordable city, by Emma Woollacott

I moved to Oxford four years ago, and scraped in by the skin of my teeth. I was chain-free, and naively assumed that this would make me an attractive buyer; but boy, was I wrong.

Two slightly cheeky offers and two asking price offers later, I realised that you need substantially more than that - preferably in cash, in a gold-plated box - to have any chance of buying in this city. I offered £10,000 above the asking price for my dream house, only to see it go to someone with £20,000 more.

Part of the problem was that I was dead set on being in the catchment for Cherwell School - which, unfortunately, overlaps fairly neatly with Summertown and Central North Oxford, where prices for a two-bedroom flat can hit £750,000.

At the time, there were a few much cheaper streets - which is why I'm here. But as the new data shows, there's not much affordable any more, and the vast majority of people that work in Oxford have little chance of getting a big enough mortgage to buy here.

Nor can anybody with an average income afford to move. The recent changes to stamp duty levels don't help many people here, and in any case moving to a house with one more bedroom can easily mean paying £100,000 more. Instead, everybody - me included - is converting their loft, meaning even fewer small, lower-cost homes.

It's hard to see a solution. It's not just the green belt that makes it difficult to build around the edge of the city; it's the difficulty of providing transport too. The city centre is a warren of little streets that are totally unsuitable for heavy traffic, and, because so many workers have to live elsewhere, the main roads in are already solid with cars at rush hour. One of my daughter's friends comes to school on the bus, and has to allow an hour and a half for the four-mile journey - even though most of this is in a dedicated bus lane.

Professor Dorling's idea of satellite towns with light rail links might work; otherwise, we'll need to wait for university scientists to invent jetpacks or teleportation.


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Which is the UK's least affordable city?

In Scotland, Edinburgh is seen as a city with huge growth potential. In 2014, prices in Edinburgh were up 10% in a post referendum boom that shows little sign of slowing down.

Local agents are not expecting quite such stellar growth for the next 12 months, but they think price rises will be well above the average predicted for the whole country.

Rightmove named this as the area where it expects house prices to grow the most over the next five years. It says that over this period there will be a huge number of people moving out of London in order to afford to get onto the property ladder. They want a reasonable commute combined with plenty of attractions in the local area, and Southampton offers all this. With relatively affordable housing stock, it's a prime candidate for growth.

Luton was Rightmove's candidate for the second biggest house price rises over the next five years. It emphasised that this isn't a mater of opinion, it is the result of crunching the data.

Luton is another major beneficiary of the move out of London, and while it is arguably not as attractive a place to live as Southampton, it's only 23 minutes into central London - which rivals some of inner London's commuter times. With average prices of £179,368, it's clearly a far more affordable option, and the area has already started to show signs of a boom.

This was the third area suggested by Rightmove. As with Southampton, it is well positioned for London commuters, and also has huge local attractions.

A survey last year asked young professionals to name the place they would most like to live, and Brighton and Hove were the only areas that appeared on the list outside London.

One of the reasons it's not higher up the list is that houses are already on the pricey side, with an average cost of £338,956 - up 13% in the past year alone.

There may be few people who grow up with the dream of living in Swindon, but the electrification of the rail line to London will bring travel times down across the West Country, so Swindon becomes part of the outer commuter area.

Given that the average property costs £168, 968, it's easy to see why Swindon will be a popular option for commuters on a tight budget.

Bath is also going to benefit from electrification of the line, because the commute to London will fall to a manageable 70 minutes. The beauty of the city - along with a vibrant social and cultural life - makes it a clear choice for more long-distance commuters.

Of course, with an average asking price of £374,617, it's not a tremendously cheap place to buy, but the geography of the city restricts development, so these prices are expected to rise still further.

Property Frontiers says that the booming house prices in Oxford are set to get even higher. At the moment, travel to London takes 60 minutes, but this will reduce even further in 2016 when the line is electrified. Prices in the most desirable parts of the centre aren't much cheaper than London.

However, further out there are pockets of affordability, and when the Water Eaton station opens in 2015 it will open up areas to the north of the city too.

Manchester has seen enormous property price rises over the last couple of years, and Property Frontiers expects this to continue into 2015.

Other commentators are expecting the growth to slow over the next few years, especially given the gains made since 2012. However, demand for properties remains buoyant, and with the growth of the local economy, price rises seem inevitable.

Rising prices in London have pushed buyers further and further out of the centre, so estate agents are now claiming zone three as 'the new zone 2'.

Savills believes that the biggest gains over the next five years will be the less glamorous districts - putting the South and East in the frame. Gritty areas that could benefit include Ladywell, Streatham and Catford in the south, and Leytonstone, Forest Gate and Walthamstow in the east.

Cambridge could also perform well. It has already had house prices lifted by the growth of tech companies to the north of the city, and the arrival of pharmaceutical headquarters will help push prices up further.

In 2016 a new rail service from the city to the science park will keep prices rising, and beyond the opportunities presented by the local economy, Cambridge is also part of the 'outer commute' area of London, which Savills expects to shoot up in value over the next five years.

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