Areas such as Cambridge, London and Oxford are seeing affordability levels improve compared to figures in 2015 according to the latest UK Cities House Price Index from Zoopla.
In the capital, the average house price now stands at 13 times the average Londoner’s earnings which is a return to levels last seen at the same time in 2015.
In Cambridge and Oxford, house prices now sit at 12 and 11 times average earnings respectively which are both back to 2015 levels.
The Office of National Statistics recently revealed that earnings growth (3.7%) is now outstripping house price inflation across 12 cities.
Richard Donnell, research and insight director at Zoopla, said: “Housing affordability is slowly starting to improve in London as earnings growth outstrips house price inflation.
“There has been a clear downward trend in the ratio of house prices to average earnings over the last two years.
“However, the scale of improvement is relatively modest.
“While welcome news, the gap between earnings and prices needs to close further in order to make a material difference to would be purchasers.
“The changing picture is not limited to London. There are 12 cities where the annual growth in house prices is below the growth in average earnings which is running at 3.7%.
“Lower-priced cities in northern England are actually getting less affordable than their southern counterparts when you consider that the annual percentage growth in house prices is outstripping earnings growth.”
In southern cities such as Bournemouth and Southampton there has been a small decrease in house price to earnings ratio since 2016.
Birmingham saw the fastest growing house prices across 2018 and has recently seen the annual rate of growth slow to 3.5%.
Edinburgh and Liverpool have each experienced annual house price growth of 5.8%.
Only two cities saw annual house price declines in July, Aberdeen (-4.8%) and Oxford (-0.4%).
Donnell adds: “The affordability of housing varies widely across the UK from a high of 13x in London to a low of 3.7x in Glasgow.
“This reflects the huge variation in house price growth over the last decade and the relative strength of demand and availability of housing supply across UK cities.
“In cities with attractive affordability there is room for further house price growth so long as mortgage rates remain low and the economy continues to grow and create jobs.
“However, house price growth levels are slowing down and this is likely to build into the autumn until there is greater clarity over the Brexit process and its implications on the economy.”
The index focuses on trends in housing affordability as measured by the ratio of house prices to average earnings at a city and national level.