'Number of first-time buyers hits record low

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For sale: Hometrack, says first-time buyers who have no 'third-party assistance' are nearly extinct

The number of first-time buyers has fallen to its lowest level since records began.

With the average house price approaching £200,000, young people accounted for just 15 per cent of all purchases in the past year, research shows.

The findings highlight the dilemma facing couples or young single people trying to get a foot on the housing ladder. They could also signal danger ahead for the housing market in general.

In the 1980s and early 1990s, around 50 per cent of mortgages were taken out by young people.

The research, from the property information firm Hometrack, says first-time buyers who have no ' third-party assistance' are nearly extinct.

Of the 1.1million homes bought in England and Wales this year, only 175,000 were bought by young people with no family assistance. Director Richard Donnell said a further 15 per cent were entering the market, but only with help from somebody else.

This is typically their parents, who provide the deposit or offer to guarantee the loan, which enables them to borrow a larger amount.

The average mortgage taken out by a first-time buyer is £112,000, though the figure is higher in London and the South East.

Figures from the Council of Mortgage Lenders show young people are having to borrow 3.27 times their salary, a record income multiple.

Mr Donnell said: 'The number of first-time buyers who do not get any help is at an all-time low.

'House prices are being pushed along by people who are already on the ladder and are selling up to buy another house. But a growing number of young people are being left behind.'

The disappearance of the first-time buyer could spell serious problems for the housing market as a whole, though the most recent figures do not show any drop-off in prices.

The Halifax, Britain's biggest mortgage lender, show prices have risen nearly 10 per cent to an average of £190,000 over the past year.

In the more exclusive parts of London, such as Kensington and Chelsea, they have gone up 'in excess of 20 per cent', says Hometrack.

Next year, experts say, they will continue to rise ahead of inflation, with one prediction of 15 per cent. Inflation is currently 2.7 per cent.

Recent research showed soaring numbers of buyers taking out mortgages of more than £1million to buy homes which cost half this amount just a few years ago.

Mortgage companies say they are doing a roaring trade in top- end home loans, particularly among City workers with big bonuses to spend, and wealthy foreigners.

Savills Private Finance has seen the number of such loans increase by 50 per cent over the last year.

Melanie Bien, from Savills, said: 'The numbers have been going up every year, but we have seen a particularly big jump this year.

'Our clients who take out these mortgages are mostly City workers who have received bonuses and buyers from Russia and America.'

One in three people think house prices will rise by more than six per cent in 2007, according to a survey by the financial website Thisismoney.

About six per cent of the 1,500 people polled expect a rise of more than 20 per cent.

 

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