House prices may be falling throughout the UK but this is not enough for first time buyers. New research shows that more than one in four of those looking to get onto the property ladder are out priced in their local housing market.
Hometrack, the property information group, report that almost 30% cannot afford even the cheapest property prices in their area. In places this figure reached 41% in London to more than 50% in other areas.
These affordability issues are being blamed on rising mortgage costs, the banks unwillingness to lend and strong house prices compared to the average pay packet. Mortgage costs for first time buyers rose by 12% in 2007, meaning that almost 35% of a monthly wage will go to the mortgage payment.
Richard Donnell, director of research at Hometrack said: “Until such time as mortgage rates start to fall then lower house prices will be the only real driver of improved affordability for first time buyers.”