First-time buyers struggling
First-time buyers are taking twice as long to save for a deposit, but are desperate to get on the property ladder, new research reveals.
In the last few days studies from mortgage lenders Halifax and Abbey have revealed that the position for new homeowners in the UK became a good deal worse over the course of 2005.
Halifax says that it now takes first-time buyers an average of five years to save up a deposit, almost twice as long as five years ago.
As house prices accelerated faster than income levels, and with interest rates also rising in the last few years, the number of first-time buyers entering the market in 2005 was at its lowest level since 1980.
In 2000, the typical deposit for a first home was £9,894, equivalent to 42 per cent of the average annual income. A typical deposit is now £23,967, equivalent to 76 per cent of the average annual income.
But even though house prices have now stopped their rapid rise, Abbey reveals today that 50 per cent of prospective homeowners think that if they do not get on the property ladder soon, they never will.
This is a large rise on last year, when half the number of prospective first-time buyers felt the same pressure.
"First-time buyers need to save harder and for longer than ever before so as to put down a decent deposit on a house. This explains why the number of first-time buyers entering the market was close to record lows in 2005," said Halifax group economist Tim Crawford.
Abbey's chief economist Barry Naisbitt added: "The proportion of first-time buyers that feel they need to buy now has doubled since last year. However, we would urge first-time buyers not to panic buy because purchasing a property is a significant commitment that requires careful consideration.
"If our forecast for house price inflation of two per cent this year is correct, then this suggests that there is less pressure to buy than if house prices were rising at 20 per cent per year."
Currently the least affordable areas to buy a first home are London and the south-east, with a first-time buyer in Gerrards Cross in Buckinghamshire having to shell out 17.8 times their average income to buy a typical home.
By contrast, the most affordable town is Nelson in Lancashire, where the average property costs just 3.3 the typical first-time buyer's income.
To find a cheap UK mortgage, go to www.myfinances.co.uk/mortgages.htm
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