London continues to be one of the least affordable regions in Britain for homebuyers, despite a slight improvement in the price-to-earnings ratio, according to research by Lloyds bank. The average home in London now costs 10.3 times average earnings, down from 10.9 a year ago, but still far above the national average of 7.3.
Lloyds determined that the average British home is priced at approximately 7.3 times average earnings, marking the lowest price-to-earnings ratio since 2015 and a decline from 7.6 recorded twelve months previously. The bank reported that wage growth has exceeded house price rises throughout the past year, reducing the affordability divide.
National Affordability Improves
Lloyds' assessment compared statistics from April to June 2026 with similar periods in earlier years, drawing upon information from its house price index and Office for National Statistics (ONS) data. While the comparisons examined the second quarter of each year, Lloyds evaluated all quarters and discovered that no other quarter had fallen below 7.3 for 11 years.
For those buying their first property, the typical home costs marginally under six times earnings, with a ratio of 5.9, Lloyds stated. The most substantial improvements during the past year were generally found in areas where property prices were already comparatively elevated relative to earnings.
Regional Variations
The South East of England saw a considerable decrease, with the average home costing 9.1 times earnings, down from 9.7 twelve months ago. Eastern England saw a decline from 8.7 to 8.2, while the South West decreased from 8.2 to 7.7. Scotland's ratio stayed largely static at 5.3.
Northern Ireland diverged from the broader UK pattern over the past year, with prices climbing more rapidly than wages, pushing the average house price-to-earnings ratio upwards from 5.8 to 6.0. The North East of England saw its ratio slip from 5.1 to 5.0, the North West dropped from 6.5 to 6.3, and Yorkshire and the Humber edged down from 6.0 to 5.8.
Most and Least Affordable Areas
The study identified areas where properties are notably affordable relative to typical earnings. Scottish locations dominated the rankings, with homes in Inverclyde and Aberdeen priced at 3.5 times average salaries. Properties in Kingston upon Hull, Blackpool and Dundee stood at 3.6 times earnings.
Meanwhile, Elmbridge in Surrey emerged as Britain's least affordable local authority with a ratio of 17.4. Kensington and Chelsea in London came second at 17.3, while St Albans in Hertfordshire ranked third least affordable at 14.1. Lloyds excluded Northern Ireland from its more detailed regional analysis owing to limited sample sizes.
In London, Barking and Dagenham was the most affordable borough with a ratio of 6.2, while Kensington and Chelsea was the least affordable at 17.3. The typical house price in Kensington and Chelsea is £895,893, compared to £322,675 in Barking and Dagenham.
Expert Commentary and Government Initiative
Andrew Asaam, mortgages director at Lloyds, said: "There are some encouraging signs for people looking to buy a home. Wages have continued to rise while house prices have remained relatively stable, helping to narrow the gap between earnings and house prices."
He added: "However, affordability remains stretched for many households. Mortgage rates are higher than they were a year ago and saving for a deposit continues to be one of the biggest barriers facing first-time buyers. Buyers may have more options than they realise, including mortgages designed for those with smaller deposits."
He continued: "While these won't be right for everyone, they can help some buyers take their first step onto the housing ladder sooner."
The Government recently unveiled a new initiative aimed at supporting first-time buyers in England to get onto the property ladder. The Your First Home initiative will give first-time buyers the chance to buy a new-build property with a 2.5% deposit, with the Government lending an extra 20% towards the cost. Further information will be set out in the Budget, with developers also expected to contribute when signing up to the scheme to help cover costs.
Mr Asaam said: "For first-time buyers in particular, a small shift in location could make a big difference, not just in getting on the ladder, but in what kind of property is within reach. Many parts of Scotland and northern England continue to offer some of the best value relative to local earnings. For buyers with flexibility over where they live, that can make a meaningful difference to what they can afford."
Below are the 10 most affordable locations in Britain for homebuyers, according to Lloyds, based on average house price-to-earnings ratios. The figures show the average house price followed by the average price-to-earnings ratio:
- Inverclyde, Scotland, £146,030, 3.5
- Aberdeen, Scotland, £147,851, 3.5
- Kingston upon Hull, Yorkshire and the Humber, £134,642, 3.6
- Blackpool, North West, £141,550, 3.6
- Dundee, Scotland, £152,072, 3.6
- Dumfries and Galloway, Scotland, £153,360, 3.7
- North East Lincolnshire, Yorkshire and the Humber, £138,543, 3.7
- Angus, Scotland, £160,928, 3.9
- Middlesbrough, North East, £139,678, 3.9
- East Ayrshire, Scotland, £162,459, 3.9
Meanwhile, here are the 10 least affordable locations in Britain for homebuyers, according to Lloyds, based on average house price-to-earnings ratios. The figures show the average house price followed by the average price-to-earnings ratio:
- Elmbridge, South East, £726,523, 17.4
- Kensington and Chelsea, London, £895,893, 17.3
- St Albans, Eastern England, £568,940, 14.1
- Hammersmith and Fulham, London, £690,484, 13.3
- Waverley, South East, £555,410, 13.3
- Westminster / City of London, London, £687,020, 13.3
- Windsor and Maidenhead, South East, £548,375, 13.1
- Richmond upon Thames, London, £648,526, 12.5
- Sevenoaks, South East, £521,367, 12.5
- Guildford, South East, £514,773, 12.3
The research highlights that while affordability has improved nationally, London and the South East remain the least affordable regions, and the Government's new initiative aims to support first-time buyers, with further details expected in the Budget.
