Kensington and East Ayrshire top and bottom in affordability survey

Kensington and Chelsea are the least affordable areas to live in the UK, while East Ayrshire is the most affordable, according to Nationwide.

The London Borough posted a first-time buyer price-to-earnings ratio (HPER) of 14.7 last year, while the Scottish local authority reported a ratio of 2.4, according to the building society affordability report.

The measure is based on the average FTB revenues in each region.

The other two least affordable areas in the country were Oxford in the south east and Hertsmere in the east of England, with ratios of 10.1 and 10.0, respectively.

The other two most affordable areas in the country were Copeland in the northwest and County Durham in the northeast, with ratios of 2.8 and 3.1, respectively.

Andrew Harvey, Senior National Economist, says: “Based on the latest data, Kensington and Chelsea remain the least affordable local authority in London, and by extension Britain, with an HPER of 14, 7.

“Oxford remains the least affordable area in the South East, with house prices 10.1 times higher than average incomes in the region, up from 9.2 a year ago. House prices in Oxford have risen by 14% over the past year, one of the largest increases in the Southeast.

He adds: “East Ayrshire, Scotland continues to be Britain’s most affordable authority, with average FTB housing prices at just 2.4 times average incomes. East Ayrshire covers a large geographical area south of Glasgow, but its main towns are Kilmarnock and Cumnock.

“Copeland remains the most affordable area in the North West of England, despite average prices up 11% over the past year. While the region includes parts of the western Lake District, its main settlements are along the Cumbrian coast from Millom to Whitehaven.

The survey found that London has by far the biggest gap between the least and most affordable boroughs, with Bromely at a HERP score of 7.4 and Kensington and Chelsea at 14.7.

The North East has the smallest gap between least and most affordable areas, with County Durham at 2.8 and North Tyneside at 4.3.

The survey indicates that 25% of local authorities have seen an improvement in accessibility since 2016.

The three areas that made the biggest improvement during this period were Westminster (down 3.8% to 14.3), Cambridge (down 1.5% to 8.8) and Reading (down 1.2% at 6.4).

The report states that in all of these areas “income growth has outstripped house price growth”.

Around 45% of local authorities now have an HPER of 6+, compared to around 35% in 2016. Only 14% of localities now have a ratio below 4, compared to 22% five years ago.

Nationwide’s Harvey says: “It helps illustrate the challenge that many FTBs across the country face, in terms of collecting a down payment to buy their first home. Additionally, the cost of servicing a mortgage as a share of take-home pay is now above its long-term average in the majority of parts of the UK.

Chesterton Sales Manager Cory Askew said: “It seems surprising that Westminster’s affordability rating is improving so much, given its position in Zone 1; yet; the area has always seemed to offer better value for money compared to other central London locations.

“Buyers could get a period property in a garden square in Pimlico for £1,000 per square foot, but face double the price a short walk up the road to more boutique areas such as Belgravia.

“With major infrastructure investment around Victoria Station, it remains to be seen whether Westminster’s accessibility rating remains at low levels.”

On Kensington & Chelsea, Askew adds: “Since the second half of 2021, global demand for properties in central London has been insatiable.

“Compared to the same period last year, we saw an astonishing 200% increase in new buyer registrations, which was driven by domestic and international demographics.

“Recognized as one of the most desirable areas, Kensington & Chelsea attracts investors and buyers who favor the area for its reputation for well-managed communities, an abundance of London landmarks and proximity to parks.”

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