According to the findings this is up 18% from £45,000 just three years ago. However, the income to buy ranges from £25,000 in Liverpool to £82,000 in London.
The data highlights how house price growth has outstripped wages over the past three years, pushing the dream of homeownership further out of reach for those households on lower incomes. Hometrack’s UK city index shows how house prices have risen by an average of 14.5% over the last three years, whereas average wages have grown by just 7.5% to £489 a week over the same period, according to the Office for National Statistics.
Buyers in Bristol and Manchester must now earn a minimum of £58,826 and £34,770, respectively, to get on the housing ladder – a 24% increase in three years.
The situation is not much better for buyers in Birmingham, Nottingham and Leicester, where the income required to get on the housing ladder has shot up by 23% since 2015.
Buyers in Aberdeen, on the other hand, now need just £34,262 to buy their first home – down £5,388, or 14%, compared to three years ago. This is because house prices in the Scottish city have fallen 17% to £164,800 in that time.
Overall, house prices in the UK’s largest 20 cities have grown by an average of 3.9% in the year to August. The fastest growing cities are the most affordable. Liverpool and Glasgow are registering price growth of 7.5% and 7.2%, respectively, over the past year.
Price growth is weakest in the most unaffordable cities along with Aberdeen. Just three cities experienced price drops in the year to August – Cambridge, London and Aberdeen, falling by 0.1%, 0.3% and 3.7%, respectively.
Richard Donnell, Insight Director at Hometrack, says: “House price growth continues to outpace earnings across 16 of the 20 cities covered by the index as buyers continue to bid up the cost of housing on the back of low mortgage rates and high levels of employment. The fastest growth is being recorded in the most affordable cities where prices are rising off a low base.
Cities like London and Cambridge require the highest incomes to buy a home and as a result they are registering flat to falling prices. Meanwhile cities like Bristol and Bournemouth are starting to register slower growth as affordability pressures increase. Higher prices and a further drift upwards in mortgage rates means that these affordability pressures will continue to steadily build. However, there are many cities where affordability remains attractive and prices are expected to continue their upward trend.”
Simon Heawood, CEO of Bricklane.com, comments: “The UK's regional cities continue to show strong performance: employment growth and infrastructure investment make places like Leeds, Manchester and Birmingham particularly attractive to both buyers and renters, and this growing demand drives prices higher in the face of supply constraints.
From an investment perspective it's important to remember today's figures are just headline numbers. There are many sub-markets which behave differently. For investors still wanting to invest directly in buy-to-let rather than opting for a tax-efficient residential property fund, this means identifying the right market segments for investment. It also means being diversified so that risk is not concentrated into a single asset or geographic location.
Andy Soloman, CEO at Yomdel says: “There’s every chance a no deal Brexit will have a substantial impact on the economy but until this comes to fruition we can only predict the extent of said impact.
Until then, the property market in the UK’s major cities will remain fairly robust and prices will continue to climb, driven by low interest rates and an imbalance between supply and demand.
While the fog of market uncertainty still hangs over London, the latest figures also demonstrate the drastic regionalities in the current UK market and the difference in performance from one city to the next. Despite the increasing gap between wages and prices, there is still plenty of scope for these more affordable cities to see continued property price growth.”
