Survey reveals Chichester among least affordable in UK for property

A survey looking at house prices and average earnings has revealed that Chichester is among the least affordable cities in the UK.

Thursday, 12th August 2021, 2:52 pm
A survey has revealed Chichester to be one of the least affordable cities in terms of property

Research carried out by Halifax Bank identified the most and least affordable of 61 cities over the past 12 months to June this year.

Chichester took fifth place and Brighton seventh place on the list, both less affordable than London which was in eighth position. Winchester was revealed as the least affordable city.

The bank's annual Affordable Cities Review revealed the average house price of UK cities has grown by 10.3 per cent while average earnings for those living and working in cities rose just 2.1 per cent.

As a result, the average home in a UK city now costs 8.1 times average earnings which is known as the Price to Earnings, or PE, ratio.

The research shows that, while house prices in cities rose to £287,440, up 10.3 per cent, wages in the same locations only rose by 2.1 per cent to £35,426.

This increased gap between house prices and earnings has lifted the PE ratio to 8.1, from 7.5 in 2020, meaning buying a city home has become less affordable for those that live and work in them.

After sitting at 5.6 from 2011 to 2013, the PE ratio for UK cities has now risen for eight successive years.

Londonderry in Northern Ireland retained its position as the UK’s most affordable city for the third year in a row, with a PE ratio of 4.7.

A 13 per cent increase in average earnings last year saw Carlisle join Bradford in second place (both 4.8), ahead of Stirling, Aberdeen, and Glasgow, all with a PE ratio of 5.4.

Winchester has become the UK’s least affordable city, replacing previous table-topper Oxford, with homes now 14 times annual earnings for those living and working in the city.

A home in the Hampshire cathedral city will now set buyers back an average £630,432, up eight per cent on 2020, while average earnings - though notably higher than for the UK as a whole - are £45,059.

Last year’s least affordable city, Oxford, saw average house prices rise to £486,928, up by two per cent from last year, at a PE ratio of 12.4. Tied for third place are Truro and Bath, both with PE ratios of 12.1, after average house prices rose by 18 per cent and 17 cent respectively over the past year.

Chichester, with a PE ratio of 12.0, took fifth place on the list of least affordable cities. Average house prices were £449,243 with mean annual earnings at £37,352.

Brighton was seventh with a ratio of 11.6, average house price at £339,243 and mean annual earnings at £38,737.

At eighth position in the list, London is outside the five least affordable cities for the first time in six years, yet affordability did not improve over the last year.

Average house prices in Greater London rose by five per cent to £564,695, while earnings grew by four per cent, pushing the capital’s price to earnings ratio up to 11.0 (10.9 in 2020).

Caroline Wood is the director of the Coastal West Sussex Partnership, an economic partnership that sits at the key intersection between the public and private sectors, regarding education, skills and investment in the area.

She said: “Chichester has been named by Halifax bank as the fifth least affordable city in the UK based on a ratio of average income to house prices – less affordable than even London and nearby Brighton and Hove.

“Chichester is a beautiful and historic city, surrounded by an abundance of natural beauty. As a result, it’s a popular place for people to live, especially for people who want to retire. It’s also in close proximity to London. With this, and the need to conserve the South Downs National Park, affordable housing can present a challenge here.

“However, Chichester is a vibrant place for business investment. Something we are particularly hopeful about is the excellent educational opportunities in Chichester, which will lead to a more skilled workforce and drive investment.

“The University of Chichester is in the UK’s top 30, with a leading business school and 96.5% of its graduates in employment six months after completing their degrees. We also have the Chichester College Group, rated as Outstanding by Ofsted, and shortlisted to become an Institute of Technology.

“We see these educational institutions as powerfully positive drivers of change for the area – our message to businesses is to invest in this potential and create more of the high-paid jobs needed to accommodate a technically skilled workforce. While this won’t decrease house prices in the area, and a focus on more affordable housing is incredibly important, we urge businesses to consider the skills on offer in Chichester.”

Russell Galley, managing director, Halifax, said: “Winchester is now the UK’s least affordable city, while Londonderry has held its place as most affordable, with the lowest city house prices in the UK.

“We can see from our research that affordability is significantly better in the North and there are now just two cities - Plymouth and Portsmouth - with better than average affordability in the South.

“Rising house prices have generally continued to outstrip wage growth, which reduces overall affordability, however the picture is mixed for buyers.

“For city home-movers who want to stay in their area, the level of equity in their current property is likely to be an important factor in how affordable the local area is for them, whereas raising a deposit remains an issue for many first-time buyers.

“Nevertheless, some areas, like Carlisle, saw affordability improve, and cities like Bradford and Glasgow are some of the more affordable in the country.”