The gap between house prices and average earnings has reached a record high in London, according to a new study conducted by Hometrack.

The UK Cities House Price Index revealed that the property price to earning ratio in the capital is now 14.5 times average earnings – 42% higher than the average for the last 15 years.

Cambridge was close behind at 14.3, followed by Oxford (12.6) and Bournemouth (10.1). Bristol came fourth with a 9.7 ratio.

In contrast, three cities – Glasgow, Liverpool and Newcastle – have current house to earning ratios lower than the 15-year average at 3.9, 4.5 and 4.7 respectively. In the same period, the difference between average earnings and house prices has remained the same in the majority of the cities outside the south east.

Overall, the rate of city house price growth increased significantly, from May’s figure of 2.8% to 6.1% in October 2017 – the highest rate of growth since September 2016.

There were disparities between different cities in the UK in terms of house price growth. In London and Cambridge, for example, prices are currently 60% higher than in 2007 while prices remain lower than a decade ago in Glasgow and Liverpool.

Meanwhile, in Leeds, Manchester and Birmingham, the house price to earnings ratio is between 5% and 13% higher than the 15-year average. Despite the recent base rate increase, Hometrack predict that due to current affordability levels, house prices in regional cities are likely to go up further.

Research and insight director at Hometrack, Richard Donnell, expands on this, stating that house price growth in these areas remains ‘robust’ as unemployment continues to fall and affordability is still appealing.

He added: “As long as mortgage rates remain relatively low and the economy continues to improve, there is a strong feasibility that house prices will rise steadily in regional cities over the next two to three years.”

Unlike many regional cities, as house prices adjust to the levels that home buyers are prepared to pay, London is set to underperform over the next two to three years. This has also led to a 15% drop in the number of first-time buyers over the last three years.

However, changes to stamp duty will not impact this trend as the biggest challenge for first-time buyers is the income required to pass mortgage affordability stress tests, according to Hometrack.

“Unaffordability in London has reached a record high despite a material slowdown in the rate of house price growth over the last year,” Donnell continued. “Lower housing turnover in the capital has led to a tightening of supply in recent months which has stabilised house price growth.”

He added: “Even so, the gap between average earnings and house prices in the capital has never been wider.”