More than nine-in-ten, or 92% of the UK's main postal towns are now out of reach of the average first time buyer of residential property, according to figures published by Halifax.
Additionally, the lender notes even the lowest price/income ratio for the average property in any of the 597 towns reported on stands at more than 3x – higher than the recommended price/earnings multiple used by lenders to determine maximum borrowing limits.
Average prices in the most expensive UK town according to the price/income multiple – calculated using regional first time buyer average income figures from the Council of Mortgage Lenders – stand at 18.02x for Gerrards-Cross in the Southeast.
The cheapest town according to the p/i multiple is Lochgelly in Scotland on 3.04x.
The national average price paid by first time buyers (FTBs) increased 16% in 2004 to £131,024, but regional increases were as high as 27% and 25% in the North of England and Wales respectively.
Perhaps unsurprisingly, the number of FTBs fell to the lowest since 1981, or 361,000 for the whole year.
Rising prices are not the only reason for this: average deposits increased to 20% of the price, up from 12% in 1989, Halifax reports.
Than means, for example, the average deposit in Greater London has soared to £48,364.
FTBs are also older, now 34 on average, but 37 in Scotland.
There is good news ahead for FTB’s however, with Halifax predicting faster growing incomes through 2005 and in the medium term.
This should reduce average price/earnings ratios, making it easier for first-time buyers to enter the market, Halifax says.IFAonline
£300bn of liabilities
View from the front row
Transfer from occupational scheme
Appointed by FCA and PSR boards