Page last updated at 10:13 GMT, Thursday, 17 April 2008 11:13 UK

'Struggle' for first-time buyers

House for sale
First-time buyers are having to pay bigger deposits to get the best deals

The housing boom of the last decade has priced many first-time buyers out of the UK property market, according to the charity Shelter.

The charity's Roof Affordability Index found that the price of an average first-time property rose from 52,674 in 1997 to 159,494 last year.

The figures showed that buyers' average income had become smaller compared with the price of a property.

Prices are now starting to fall, but mortgages have become harder to secure.

London prices

Those hoping to get on the property ladder in London faced the biggest problems, with the prices for first-time buyers in the capital rising to 260,000 last year, Shelter said.

Mortgage repayments swallowed up almost 21% of the average working household's income in 2007, the figures showed, compared with 12% in 1997.

"Buying a home has now become a distant, unaffordable dream for millions of first-time buyers," said Shelter chief executive Adam Sampson.

There have been signs of a correction in property prices in recent months, with prices expected to fall during 2008.

But while this would be good news for first-time buyers, the mortgage squeeze of recent months has meant these buyers need to find bigger deposits, the cost of mortgages has risen, and the availability of deals has dropped.

'Locked out'

"Despite falling house prices, many lenders are increasing their mortgage rates, making an already desperate situation worse," said Mr Sampson.

"It means there is a generation of young people and young families being locked out of the housing market without a hope of ever sharing in the asset wealth of the generation before."

Sale signs
House prices shot up during the last decade

David Stubbs, senior economist at the Royal Institution of Chartered Surveyors, said that although mortgage rates should "drift lower" in the future, the biggest issue for first-time buyers was finding a deposit.

"Saving for a deposit is likely to remain the main barrier to entry to the market as lenders shy away from those buyers who only have a small amount of money to put down," he said.

But housing minister Caroline Flint said that the government's planning policies were aimed at helping first-time buyers.

"Over a million more people have become homeowners since 1997. However, the fact is that for a generation this country has not been building enough homes to keep up with rising demand," she said.

"That is why we have pledged three million more homes by 2020, including more shared ownership homes that can help first-time buyers get a foot on to the housing ladder."

She added that the number of affordable homes being built would rise to 70,000 a year, including 45,000 social homes, which was double the level in 2004.

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