Average house prices in the South East, and especially London, rose even faster during 2014 (January to December) than in the same period of 2013, says new research by Professor Danny Dorling of Oxford University. Once the average income is also taken into account, house prices in Oxford during 2014 even out-paced London, according to his new book.
The findings by Danny Dorling, Halford Mackinder Professor of Geography at the University of Oxford, are published in his new paperback book, All that is Solid: How the Great Housing Disaster defines our Times and What We Can Do About It, launched on on 26 February. He explains that one significant factor is that Oxford employees have lower incomes on average, with the London weighting allowance only applying to a small percentage of Oxford’s workers who commute to London.
The paperback book, coming a year after the book’s hardback release, includes more recent data on the leap in house prices in parts of England, Wales and Scotland, as compared with the latest government data on average earnings.
Professor Dorling said: ‘My own latest analysis from October 2014 to January 2015 shows that the ratio of average house prices to incomes in Oxford rose to over 15 times the average annual income as compared with 14 in London. This is reinforced by similar findings from the London-based Centre for Cities think tank, which has found that Oxford’s housing is now the least affordable in the nation.’
According to Professor Dorling’s research, the average cost of a house in Oxford in 2014 was £426,720, well outstripping the average income of £26,500 of Oxford city workers. Meanwhile, in London, the average house price in 2014 was £501,520, with the average income of people working in London set at around £31,950.
During 2014, house prices in London went up by £45,620 on average compared with 2013 when they were around £34,150 above an average property sold in 2012. In Oxford, prices leapt by around £37,850 for an average property sold in 2014 as compared with 2013 prices which were around £13,090 higher than in 2012. Although average property prices in London are still higher than in Oxford, the average income of Londoners outstripped average incomes in Oxford by nearly £5,500 in 2014.
Professor Dorling commented:'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. 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.'
According to Professor Dorling’s analysis, other parts of the country where average house prices were much higher than average incomes in 2014 were Cambridge (14.8 times higher); Brighton (12.2 times), Reading (10.1 times) and Milton Keynes (8.0 times).
Cities where house prices were calculated as less expensive relative to the local average annual income in 2014, were Liverpool (5.8 times); Derby (6.2 times); Nottingham (6.8 times); Swansea (6.7 times) and Birmingham (7.3 times).
Professor Dorling added: 'Compared with earlier decades, house prices across the UK are extremely high when compared with the average take home pay. 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.'