UK city homes more affordable: study

Home affordability for people living in the UK's cities is at its most favourable in nearly a decade, a study has found.

The typical price for a UK city home is STG173,202 ($A267,369.56), equating to 5.5 times gross annual average earnings, the lowest ratio since 2003 and way below the peak of 7.2 recorded in 2008, the Lloyds TSB Affordable Cities review said.

House price drops are the main factor behind the general improvement in affordability, the study said.

Since 2008, the typical UK city house price has fallen by 18 per cent or just over STG37,400 ($A57,733.87), from STG210,605 ($A325,108.06) in 2008 to STG173,202 ($A267,369.56) in 2012.

Salford was named as the UK's most affordable city, with property prices standing at 3.81 times yearly earnings, partly reflecting a 32 per cent fall in house prices in this area since 2008. Average property prices in Salford stand at STG102,391 ($A158,059.59).

Seven out of the eight most affordable cities are in the north of England or Northern Ireland, including Belfast, Londonderry, Bradford, Lancaster and Durham.

Meanwhile, the least affordable city is Truro where the average property price, at STG250,489 ($A386,676.44), is nearly 10 times gross average earnings in the area. Oxford came in second place.

The "least affordable" list is dominated by the south.

Suren Thiru, housing economist at Lloyds TSB, said: "The improvement in housing affordability within many of our major urban conurbations has been significant during the past few years and reflects the decline in house prices over the period.

"There is, however, a distinct north-south divide to the locations of the most affordable UK cities."

He said the improved general affordability could be offset by households facing trouble raising deposits and general uncertainty over the outlook of the UK economy.

Lenders have been tightening their credit criteria and mortgage availability generally is expected to decrease in the coming months, according to a recent Bank of England report.

Despite the gains in affordability, city living remains more expensive than the UK average, where homes cost around 4.3 times typical gross annual earnings.

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