for sale signsCity living has become less affordable over the last year as house prices have rallied, a report has found.

At £172,556 on average, the price of a home in a UK city now costs around 5.60 times typical gross annual earnings, up from 5.55 times typical incomes in 2012, Lloyds TSB found.

Lloyds put the recent slide in affordability down to city house prices starting to creep back up again during 2012 following a general decline seen since 2008. House prices in urban areas have increased by 1.7% over the last year.

With its close commuter links to London and its stunning architecture, Oxford, the city of dreaming spires, was named as the UK's least affordable city, where house prices are almost 10 times earnings.

Meanwhile, Londonderry in Northern Ireland, where house prices have fallen sharply since the economic downturn, was the most affordable city, with homes costing less than three-and-a-half times the yearly local wage.

The 10 least affordable cities to buy a home in were all in the South of England, where house prices tend to have held up more strongly, including Salisbury, Bath, Brighton and Exeter. Northern Ireland, Scotland and the North of England were home to the most affordable cities, including Lisburn, Belfast, Stirling, Glasgow, Salford and Bradford.

The findings come after the Government unveiled a new multibillion-pound scheme in the Budget to help more home buyers get on the property ladder or move up it with a 5% deposit. Help to Buy has been given a cautious welcome as a further boost to kick-start the market, but the Government has been warned that the scheme must not create a "housing bubble" and push up house prices to an extent which could eventually lead to a crisis.

Surveyors and lenders have been reporting signs of confidence returning to the market following the launch of another Government scheme last August called Funding for Lending, which has prompted lenders to slash their mortgage rates and the number of mortgages on the market to increase by around one third.

Despite house prices holding up strongly in London compared with the rest of the country, the English capital fell just outside the top 10 "least affordable cities" list, at number 11. Higher average house prices in London are offset to some extent by higher earnings compared with other cities.

However, there are huge variations within London, with homes costing 5.7 times local earnings in Greenwich compared with 13.7 times the typical salary in the City of Westminster. Living in a city is generally a more expensive option than the average cost of a home, which is around 5.4 times earnings across the UK.

© 2013 Press Association