Kensington and Chelsea is the least affordable area to live in the UK, while East Ayrshire is the most affordable, according to Nationwide.
The London borough posted a first-time buyer house price to earnings ratio (HPER) of 14.7 last year, while the Scottish local authority reported a 2.4 ratio, says the building society’s Affordability Report.
The measurement is based on the average earnings of FTBs in each region.
The two other least affordable areas in the country were Oxford, in the South East, and Hertsmere, in the East of England, with ratios of 10.1 and 10.0, respectively.
The two other most affordable areas in the country were Copeland, in the North West, and County Durham, in the North East, with ratios of 2.8 and 3.1, respectively.
Nationwide senior economist Andrew Harvey says: “Based on the latest data, Kensington and Chelsea remains the least affordable local authority in London and by extension Great Britain, with a HPER of 14.7.
“Oxford remains the least affordable area in the South East, with house prices 10.1 times average earnings in the region, up from 9.2 a year ago. House prices in Oxford have risen 14% over the past year, one of the strongest increases in the South East.”
He adds: “East Ayrshire, in Scotland, continues to be the most affordable authority in Great Britain, with average FTB house prices just 2.4 times average earnings. East Ayrshire covers a large geographic area to the south of Glasgow, but its main towns are Kilmarnock and Cumnock.
“Copeland remains the most affordable area in the North West of England, despite average prices rising 11% over the last year. While the area includes parts of the western Lake District, its main settlements are along the Cumbrian coast from Millom to Whitehaven.”
The survey found that London has by far the greatest gap between the least and most affordable boroughs, with Bromely at a HERP score of 7.4 and Kensington and Chelsea at 14.7.
The North East has the smallest gap between the least and most affordable areas, with County Durham at 2.8 and North Tyneside at 4.3.
The survey says 25% of local authorities have seen an improvement in affordability since 2016.
The three areas that had made the greatest improvement during that time are Westminster (falling by 3.8% to 14.3), Cambridge (falling by 1.5% to 8.8) and Reading (falling by 1.2% to 6.4).
The report says that in all of these areas “earnings growth outpaced house price growth”.
Around 45% of local authorities now have an HPER of 6+, compared with around 35% in 2016. Only 14% of localities now have a ratio below 4, down from 22% five years ago.
Nationwide’s Harvey says: “This helps to illustrate the challenge that many FTBs across the country face, in terms of raising a deposit to purchase their first home. Further, the cost of servicing a mortgage as a share of take-home pay is now above its long-run average in the majority of UK regions.”
Chestertons head of sales Cory Askew says: “It seems surprising for Westminster’s affordability rating to improve this much, given its position in Zone 1; however; the area has always looked like better value for money compared to London’s other central locations.
“Buyers could secure a period property on a garden square in Pimlico for £1,000 per square foot but face double the price just a short walk up the road, towards more boutique neighbourhoods such as Belgravia.
“With major infrastructural investments around Victoria Station, it remains to be seen if Westminster’s affordability rating remains at low levels.”
On Kensington & Chelsea, Askew adds: “Since the second half of 2021, the global demand for properties in prime central London has been insatiable.
“Compared to this time last year, we have seen an astonishing 200% increase in new buyer registrations which has been driven by domestic as well as international demographics.
“Known as one of the most sought-after areas, Kensington & Chelsea attracts investors and buyers alike who favour the neighbourhood for its reputation of immaculately managed communities, an abundance of London landmarks and proximity to parks.”