The number of first time property buyers in the UK has fallen to the lowest level since 1980, according to the Halifax.
The Halifax’s latest First Time Buyer Review found housing was unaffordable for the average first time buyer (4x average incomes or more) in 466 out of 483 towns analysed.
Research estimates the number of first time buyers entering the market has sunk to just 300,000 in 2007, considerably less than the 532,000 seen in 2002 and the lowest level since 1980.
In 2007, first time buyers cannot afford to buy terraced property, traditionally the most affordable option, in 71% of towns in the UK, compared with just 11% of towns in 2002.
Towns in general have become far more unaffordable, with the average property costing more than four times an average first time buyer’s income in 98% of towns across the UK, compared with just 30% in 2002.
The average price paid by a first time buyer increased 15% during 2007 to £175,093, and has risen 82% during the past five years.
The UK’s least affordable town was Henley on Thames, where the average property price is 13.1 times the average income of a first time buyer and seven of the ten most unaffordable towns are in the South East of England.
Bootle in Merseyside is the most affordable town, with average property costing 3.4 times average income.
Commenting on the results, Martin Ellis, chief economist at Halifax, says: “Rising property values have priced many potential first time buyers out of the housing market. When they do enter the market first time buyers are now more likely to be in their thirties rather than their twenties and buy a flat rather than a terraced house. First time buyers are also buying proportionately more in cities than towns as they opt for convenience over size.”
The problems faced by first time buyers have no quick fix, says Ellis, but he predicts Government initiatives and a subdued housing market should help new entrants into the market.
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