Housing affordability varies across Scotland
19 April 2012
A recent report by the Bank of Scotland has highlighted the difference in affordability of housing across Scotland. The report looks at the average annual earnings of an area and the average house price – and highlights some unexpected results.
The perception might be that Edinburgh and Glasgow would be the most unaffordable, but in reality the most unaffordable city in Scotland is Inverness. The Highland capital has long been seen as a good investment and the city has experienced strong growth, but with the average price of a home now at £165,363, this is almost six times (5.97) gross average annual earnings in the area. Edinburgh is second place, with the average house price at 5.74 times the gross average annual earnings for the area.
At the other end of the scale, Stirling is named most affordable city in Scotland. The average price there is £150,950 this is just over four times the area’s gross average annual earnings. According to the report, it is also the fifth most affordable city in the UK. Dundee follows behind, with Glasgow in third place. Surprisingly, given its affluence, Perth - which is to be awarded city status as part of the Jubilee celebrations - will be the fourth most affordable.
The disparity between income and house price has also been shown to have a knock on effect on those known as ‘key workers’ – people who undertake jobs that are vital to an area such as nursing, teaching and the emergency services. Where prices soar in boom times, salaries often do not keep up. However, another report by Halifax & Bank of Scotland has pointed towards a better outlook for key workers. According to their research, in 2007 just 3% of towns across the UK were affordable. Now, 41% are affordable for the average key worker. The most affordable towns are to be found south of the border in the North West.
For Scotland as a whole, the price is four times the average key worker earnings, compared to a high of 5.3 in 2007 during the peak of the housing market. In Scotland, the most affordable town was Bellshill at 2.5 times the average earnings. Four Scottish towns are listed as having become affordable in 2012 – Fraserburgh, Ayr, Glasgow and Livingston. However, there are a number of Scottish towns that have become unaffordable - Dumfries, Helensburgh and Bathgate.
For key workers in Inverurie, Stonehaven and Edinburgh, they may still find themselves priced out of the market, with the three being the most unaffordable at 6.6, 63 and 5.9 times the average earnings respectively.