In February 2022 it was shown that there had been a staggering annual house price growth of 10.9%. England remained the least affordable country in the UK to buy a home. On average a house in England will cost around £300,000. The most affordable country on the other hand was Northern Ireland at nearly half the price. On average a house in Northern Ireland costs around £160,000.
House price growth has been shown in all countries of the UK. Wales saw the biggest growth in house prices. The country saw an annual increase of 14.2%. Unsurprisingly London had the highest house prices of any region in the UK. As of March 2022, the average price of a house in London is over half a million pounds. However, housing prices in London did drop slightly by 0.9% in March.
This article will list the least affordable cities to buy a home in the UK. Furthermore, it will discuss and explore the reasons behind the price hikes, and why some cities are more expensive than others.
What is the least affordable city for housing?
Of all the cities in the UK, London is by far the most expensive. London is a mammoth-sized city. It is the second-largest city in Europe and has a population of more than any of the countries in the United Kingdom. For that reason, you could almost describe London as a country of its own. With such a densely populated city, that has existed for at least 2,000 years, it of course has many different boroughs. However, even the most affordable borough in London is higher than the UK average.
The most affordable borough is Barking and Dagenham which still costs around £342,466. The most expensive borough is Kensington and Chelsea which costs a whopping £1,451,567 on average. The cheapest and most expensive boroughs in London are shown below.
Most affordable boroughs in London
|Average House Price
|Barking and Dagenham
Least affordable boroughs in London
|Average House Price
|Kensington and Chelsea
|City of Westminster
|Richmond upon Thames
|City of London
This shows that although London has a diverse range of home prices. Still, even the least expensive houses are comparatively more expensive than the rest of the UK.
What are the least affordable cities to buy a home in each UK country?
As discussed London is the least affordable city to buy a house. Despite having severely unaffordable markets for housing, London has grown into a densely populated city. However, London has higher household incomes than anywhere else in the UK. The average annual salary in London is £39,716. This is over £8,000 more than the average salary of £31,285. This partially explains why so many people want to stay in London, and what drives the housing market up. As some of the most powerful companies in the world are based in London, high salaries can be offered. Competition for office and residential space in high economic areas drives up land value.
Scotland also saw a 12.1% rise from February 2021 to February 2022. Edinburgh was bottom of Scotland’s house affordability list. Prices rose by 13% to £322,855 in a single year. Edinburgh has some of the best job opportunities in the UK. This along with a wealth of culture and entertainment, and with house prices less than the UK average – has likely inspired house purchases.
In 2021 home prices boomed in Wales. There was a year-on-year rise of 14.5% in house prices in Wales. This was the biggest rise of any country in the UK with house prices in some areas rising by 24.3%. Cardiff was the least affordable city to buy a home with an average price of £248,958.
Northern Ireland is by far the most affordable country to buy a home. The average cost to buy is only £164,590. Northern Ireland has the most affordable cities to buy housing in the UK. Even its most expensive city Lisburn costs around £189,968 on average. This is around £100,000 less expensive than the UK average.
What are the top five least affordable cities to buy a home?
Least affordable cities in the UK
As already explained London is the most expensive city in the UK to buy a home. However, the other cities in the top five contrast London in population size. Each of the remaining cities have small populations in comparison. Instead, they are quaint beautiful cities rich in space and history.
For example, Winchester dates back to the Iron age in 150BC. All other cities have populations of under 160,000. Oxford and Cambridge need no introduction from an academic standpoint. Some of the greatest minds to have graced the planet have studied in these cities. Furthermore, both cities have beautiful architecture that has been featured in a number of films. It is no wonder these are some of the least affordable cities.
Chichester has one of the smallest populations of any city in the UK. Only 32,645 people live in the city. Chichester was a Roman-founded city, created in the third century AD. It is also close to the south English coast making it an ideal city for beach lovers.
It seems that other than London, people prefer to live in quaint, spacious, and beautiful cities – if they can afford it.
Why have home prices boomed?
Firstly the global Covid – 19 pandemic has driven up prices for many reasons. For example, the emergence of remote working means that people can work from any location in the UK. Instead of living in cramped cities to be close to the office, people could now move to the country. This is what many people did. Rural house sales saw a huge spike, especially in Wales. Business owners also found out they could run their businesses from home in many cases. So, they bought larger houses with room for a home office, instead of having to pay rent on office space.
Furthermore, there has been a shortage in building supplies – largely caused by the pandemic. This means that supply could not keep up with demand, driving prices up further.
Also, the government feared a collapse of the housing market so they introduced a Stamp Duty Holiday. This was to try and boost sales that had slumped, and it worked. What the stamp duty holiday meant, was that anyone buying a house costing less than £500,000 did not have to pay tax on their purchase. This further boosted house price growth.
Government-backed five percent mortgages were also introduced meaning there was a lower deposit threshold to meet. Effectively the minimum deposit was halved. This meant some who had been saving for the 10% deposit could now afford the new downpayment. This again spurred a surging real estate market. Also, many people accrued wealth during lockdowns as there was simply not a lot to spend money on. When it ended people began pouring their lockdown savings into property.
Cities with the worst housing affordability: Summary
The UK is currently experiencing the least affordable housing markets in history. In February 2022 there had been an average house price rise of 10.9% in the UK. Housing affordability in England was the worst in the UK. House prices in England rose to around £300,000 on average. Northern Ireland on the other hand had the most affordable housing markets. An average house would cost almost half that of England at £160,000.
London was bottom of the affordability list. It costs over half a million pounds on average to buy housing in London. This is largely because of the lack of space in the densely populated city, and the wealth of opportunity it provides. As London bases some of the world’s most powerful businesses, people will travel from all over the world for the best jobs in these companies. This drives the demand for housing up further.
There are vastly differing prices between each of the boroughs of London. However, the most affordable – Barking and Dagenham, will still cost around £342,466. A house in Kensington and Chelsea costs a pretty penny – £1,451,567 in fact.
The most expensive cities in each UK country are as follows:
- England – London
- Scotland – Edinburgh
- Wales – Cardiff
- Northern Ireland – Lisburn
Wales saw the biggest rise in house prices in the UK. The most expensive cities to buy a house overall were:
This showed that other than London housing was most expensive in cities with low populations, high space, beauty, and rich history.
There were many reasons behind the housing boom. Government actions and the global pandemic were mainly responsible for the rise. For example, remote working emerged as a result of enforced lockdown restrictions. Many realised they could move anywhere in the country and still do their jobs. This sparked a rise in rural house prices – most notably in Wales.
This was propped up by both a Stamp Duty Holiday and government back five percent mortgages. This made mortgages more affordable and more accessible for potential buyers. Also many accrued lockdown savings during this time. So, buyers began pouring their lockdown savings into real estate.
The rise in demand did not spur construction activity, however. This was simply because there was a lack of building materials to build with. This meant as demand rose – supply could not match it.