Home affordability for city dwellers in Scotland has improved by nearly a quarter since 2008, according to the Bank of Scotland Affordable Cities Review.

The average price for a city home in Scotland (£159,450) stands at 5.15 times gross annual average earnings. This is significantly (22%) below the peak of 6.57 in 2008. City living in Scotland (5.15) is more affordable than the UK city average (5.60).

And while there was no national improvement in affordability over the past year, the ratio of house prices to earnings remains at its lowest level since 2004 (4.94).

The marked improvement in affordability in cities over recent years has been driven by the significant fall in city house prices. Since 2008, the average city house price in Scotland has fallen by 15% (£27,928) from £187,377 in 2008 to £159,450 in 2013.

Stirling is the most affordable city in Scotland and the fourth in the United Kingdom

Stirling is the most affordable city in Scotland and the fourth most affordable in the UK with an average property price that is 3.81 times gross average annual earnings in the area. The next most affordable Scottish city is Glasgow (4.23), which is also the seventh most affordable city in the UK.

Londonderry in Northern Ireland is the most affordable UK city with an average property price (£94,776) that is 3.38 times gross average annual earnings. The two next most affordable cities are also in Northern Ireland: Lisburn (3.50) and Belfast (3.67).

A decade ago, in 2003, Stirling was the second most affordable UK city (3.13) after Bradford (2.88).

The least affordable city in Scotland is Inverness where the average property price is 5.71 times gross average annual earnings in the area.

The least affordable city in the UK is Oxford where the average property price is 9.66 times gross average earnings in the area. Three cities in the South West of England are the next least affordable: Salisbury (8.6), Bath (8.2) and Truro (8.2). Lichfield (6.75) and Leicester (6.08) are the least affordable cities outside southern England. Oxford was also the least affordable UK city (9.96) in 2003.

Nitesh Patel, housing economist at Bank of Scotland, said: “There has been a significant improvement in housing affordability in many of Scotland’s major urban areas over the past five years, largely reflecting the general decline in house prices since 2008.

“The average price for a city home in Scotland is significantly below the peak of 2008 and is more affordable than the UK city average. Looking forward, the marked improvement in city affordability is likely to help support demand for those able to raise the necessary funds to enter the housing market.”