As property prices continue to rise across the UK, finding an affordable city where one can own a home becomes increasingly challenging. However, a recent study by mortgage broker L&C Mortgages has revealed that Aberdeen has emerged as the most affordable city to own a home.
With average prices at £139,551 as of May 2023, homeowners in Aberdeen spend only 37 percent of their monthly salaries on mortgage repayments, utilities, and council tax. This article explores the findings of the study, highlights other affordable cities, and sheds light on the most expensive ones.
The Least Expensive Cities
The study conducted by L&C Mortgages aimed to determine the cheapest cities to own a home in the UK. It assessed the average cost of utilities, council tax, and a mortgage with a 4.5 percent interest rate repaid over 25 years, relative to the median salary in each location. Aberdeen emerged as the most affordable city, where homeowners spend only 37 percent of their monthly salary on housing-related costs.
The average house price in Aberdeen stood at £139,551 as of May 2023. Assuming a mortgage taken out with a 10 percent deposit and repaid over 25 years at a 4.5 percent interest rate, the total cost of the mortgage would amount to £209,349. Factoring in utilities and council tax, the monthly cost rises to £988, or 37 percent of the median salary in the area (£2,696).
Following Aberdeen on the list of most affordable cities is Dundee, where the average house price as of May 2023 was £142,777. Assuming a 25-year mortgage at a 4.5 percent interest rate, the total mortgage cost amounts to £214,189. Including utilities and council tax, homeowners in Dundee spend £1,049 per month on housing-related expenses, accounting for 42 percent of the median salary (£2,524).
Apart from Aberdeen and Dundee, the study identified Kingston-Upon-Hull, Glasgow, and Durham as the other three cities in the top five least expensive places to own a home in the UK. These findings suggest that the northern regions, particularly Scotland, offer more affordable housing options for potential buyers.
On the other end of the spectrum, Westminster topped the list of expensive cities to own a home. The average house price in the heart of London’s political district is a staggering £921,609. Considering a 25-year mortgage at a 4.5 percent interest rate, the total mortgage cost reaches £1,382,562. Comparatively, London’s property market remains highly unaffordable for many.
While property prices may have decreased slightly in terms of average earnings, rising mortgage rates have offset any benefits. According to separate research by Halifax, the average cost of a home in the UK is now 6.7 times average earnings, down from 7.3 times the previous year’s peak. Thus, potential buyers may find themselves facing higher mortgage repayments, which affects affordability.
Conclusion
Aberdeen stands out as the most affordable city to own a home in the UK, with homeowners spending only 37 percent of their monthly salaries on housing-related expenses. The findings of the study conducted by L&C Mortgages highlight the disparity in property prices across the country, with cities like Westminster remaining unaffordable for many. As potential investors consider entering the property market, they can benefit from researching cities that offer more accessible housing options, such as Aberdeen, Dundee, Kingston-Upon-Hull, Glasgow, and Durham. By evaluating factors like average prices, mortgage rates, and income level, investors can make informed decisions about where to invest their money in the property market.