The dreaming spires of Oxford have always been a magnet for tourists but if you want to live there, you may need to think again. According to a study by the city’s own university, Oxford is now the most unaffordable place in the UK to buy a house, with a property price to earnings ratio that is even higher than London.
Whilst the cost of living in London may still be higher, average house prices in Oxford are actually 16.1 times the local average income compared with 15.7 times in London.
Key drivers of this scenario is the fact that many London commuters are moving out of the capital to places like Oxford to escape the exorbitant house prices. Oxford is in easy commuting distance and it’s an attractive place to live so many people are gravitating towards the city. Because of this demand, house prices in Oxford have started to rise significantly.
Another driver of high house prices in Oxford is that the greenbelt surrounding the city is highly protected and can’t be built on. This means that properties in the city itself are highly sought after and can command a high premium.
Housing Supply Crisis
What’s happening in places like Oxford is symptomatic of the housing supply crisis that we have in the UK. There simply isn’t enough housing to meet the demand and this, in turn, is driving up house prices and also driving up the rates of rental, as people find that they can’t afford the mortgage repayments.
In addition to Oxford there are other towns and cities where the house prices to earnings ratio are significantly high. Places such as Cambridge, Milton Keynes, Reading and Brighton all have house prices which are more than 10 times higher than the local average income.
With the Bank of England talking about a potential interest rate rise, it will be interesting to see over the next 12 months how the UK housing landscape continues to change and where the next ‘unaffordable’ locations will be.