The 34 most affordable UK cities to buy a home

The UK is one of the largest economies in the world, and it is composed of England, Scotland, Wales and Northern Ireland. Real estate plays an integral role in the UK economy. For example in 2018, real estate construction was more than £110 billion per annum and contributes 7% of GDP.

There are many types of property to buy in the UK, and many who move there choose to buy rather than rent, but this is not always the best choice, because before buying a house it is necessary to analysis the real estate market, doing financial planning and determining the risk profile. Prices vary greatly across the different countries and it has no sense buying an overrated house and spending more that its real value or buying a house that you cannot pay. In this work, we are going to analyse the real estate market and finding the 34 most affordable UK cities to buy a home.

If we consider the price to income ratio, the less expensive city is Swindon, where are necessary 4.54 years to buy an apartment. Newcastle upon Tyne is in the second place with 4.94 years, followed by Kingston upon Hull with 5.21 years, Belfast with 5.22 years and Coventry with 5.41 years.

If we consider price to rent ratio of the city centre, the real estate market is undervalued in Southampton, Belfast, Newcastle upon Tyne and Swindon, so in these cities buying an apartment is better than renting. In Leeds, Nottingham, Kingston upon Hull, Bournemouth, Coventry and Glasgow is better to rent, but not always, because under certain circumstances buying is better. In Derby, Liverpool, Aberdeen, Exeter, London, Oxford, Northampton, York, Brighton, Cambridge, Leicester, Milton Keynes, Peterborough, Edinburgh, Plymouth, Reading, Norwich, Stoke-on-Trent, Bristol, Dundee, Birmingham, Manchester, Portsmouth and Cardiff the real estate market is overvalued, so in these cities renting an apartment is better than buying.

If we consider price to rent ratio outside the city centre, the real estate market is undervalued in Newcastle upon Tyne, Swindon and Aberdeenall, so in these cities buying an apartment is better than renting. In Peterborough, Coventry, Nottingham, Bristol, Birmingham, Portsmouth, Glasgow, Kingston upon Hull, Bournemouth, Plymouth, Dundee and Belfast is better to rent, but not always, because under certain circumstances buying is better. In Derby, Norwich, Exeter, Northampton, Oxford, London, Brighton, Liverpool, Leicester, York, Milton Keynes, Manchester, Stoke-on-Trent, Cambridge, Southampton, Leeds, Reading, Cardiff and Edinburgh the real estate market is overvalued, so in these cities renting an apartment is better than buying.

If we consider the mortgage as percentage of income, the less expensive city is Swindon, where the mortgage payment is about 32.06% of the incomes. Newcastle upon Tyne is in the second place with 32.12%, followed by Kingston upon Hull with 35.31%, Stoke-on-Trent with 35.47% and Belfast with 35.86%. The most expensive cities are Norwich with 116.56%, Oxford with 128.38% and London with 146.2%.

Lastly, it is recalled that there could be many occasions to buy an apartment at discount price when the real estate market is overvalued and not only when it is overvalued. In addition, that could be many expensive apartments despite the real estate market is undervalued.

About the data used in this work

Real estate market analysis is made considering an apartment of 90 square meters which price per square meter is the average of price in the city centre and outside of city centre. The indicators used are:

  • Price to income ratio. It is calculated by dividing apartment price to median familial disposable income for a year. Lower value is better.
  • Price to rent ratio. It is calculated by dividing the apartment price to the received rent income or the estimated rent that would be paid if renting. Lower values suggest that it is better to buy rather than rent, and higher values suggest that it is better to rent rather than buy.
  • Mortgage as percentage of income. It is calculated by dividing the monthly cost of the mortgage to take-home family income. Lower value is better.

The data used in this work are provided by Numbeo and are relating to mid-2019.

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