The UK’s housing bubble could burst at any time, causing prices to nosedive across many parts of the country, according to Will Davies, an ex-banker who is now working as the Managing Director of Aspect.co.uk, a property maintenance and refurbishment company.
“There is a total dearth of new houses, just a few higher priced houses,” he said. “Once the housing bubble pops, which may do anytime soon, the government's confused vision of a brighter economy would prove to be even more bewildering.”
“There is no economic basis for this phenomenon,” he added.
His concerns come after the Bank of England Governor Charlie Bean recently welcomed economic growth figures, but issued caution about rising house prices. But not everyone is convinced.
Commenting on the housing market in London, where prices are significantly more expensive than any other part of the UK, Saul Empson of Haringtons UK (right), said: “As for London’s property bubble, or otherwise, the great thing about being a cassandra is that, at some point, you'll be right! Capital Economics [an economic think-tank] have forecast the popping of London's property bubble every year since 2002. That they were right for one year  out of twelve does not make them into sages. I think the truth behind London is very, very straightforward; until more people move out than arrive, prices are headed ever upwards. It's a simple case of supply and demand.”
On average, homes in British cities now cost 5.8 times the typical local salary, according to the research by Lloyds Bank. This is up from 5.6 times last year, and distinctively above the levels common in the 1980s and 1990s.
The average property now costs £184,215.
The popular city of Oxford was named the least affordable city, with the average property costing 11.25 times earnings, or £340,864. Second on the list was Winchester, with homes costing on average 9.65 times earnings. Truro, Bath and Brighton and Hove completed the top five most expensive cities in which to purchase property.
“Over the last five to ten years, affordability has marginally improved in most UK cities, as increases in earnings have kept up with house price rises in that time,” Marc Page, Lloyds Bank Mortgages Director, said. “With city house prices continuing to rise, affordability deteriorated slightly last year, but the trend since 2009 is positive for the majority of UK cities.”
The UK affordability index(Ratio of house prices to earnings)
- Oxford, 11.25
- Winchester, 9.65
- Truro, 8.57
- Bath, 8.05
- Brighton And Hove, 7.94
- Chichester, 7.71
- Westminster, 7.60
- Salisbury, 7.40
- Cambridge, 7.32
- Southampton, 7.15
- Stirling, 3.30
- Londonderry, 3.56
- Newry, 3.90
- Belfast, 4.12
- Bradford, 4.15
- Lancaster, 4.28
- Lisburn, 4.29
- Salford, 4.45
- Glasgow, 4.51
- Durham, 4.60