First-timers face 200% price rise
Updated on 17 April 2008
House prices for first-time buyers have soared by more than 200% during the past decade, research has shown.
People taking their first step on to the property ladder paid an average of £159,494 for a home last year, compared with around £52,674 in 1997, according to housing charity Shelter.
The situation is even worse in London, with the average cost of first-time buyer properties in the capital jumping by 250% to nearly £260,000 over the past 10 years. But the average weekly income of a family in the UK has increased by just 53% during the same period, to an average of £900.
As a result the charity said it was now 78% harder for first-time buyers to get on to the property ladder than it was 10 years ago.
It warned that the situation meant a generation of young people were being "locked out of the housing market".
Even recent news that house prices are falling will bring little comfort to hard-pressed first-time buyers as any savings they make from cheaper prices are being negated by higher mortgage costs as a result of the credit crunch.
Shelter chief executive Adam Sampson said: "These new figures show in full the true and worsening situation first-time buyers find themselves in. Every year the gulf between what first-time buyers can afford and the cost of housing is widening. Despite falling house prices, many lenders are increasing their mortgage rates, making an already desperate situation worse."
The group's research found that the average first-time buyer home cost 3.4 times average earnings at the end of last year, double the ratio of 1.72 in 1997. The average monthly mortgage repayment has also soared by 172% from £304.80 to £827.87, taking up 21% of the average working household's income, compared with just 12% a decade earlier.
Not only are first-time buyers facing higher property and mortgage costs but lenders are also demanding increasingly large deposits. There is now only one group which will offer 100% mortgages while the proportion of 95% deals available has also fallen dramatically since the credit crunch first hit.
Borrowers need a deposit of at least 25% to qualify for the best mortgage rates from many lenders.
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