Parents help first time buyers with £67,000 deposits

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The Council of Mortgage Lenders said those who do not receive any parental help in the capital put down £19,000, despite earning an average of £57,000 a year.

Research by the organisation found that nearly half of all first-time buyers under 30 received help getting on the property ladder in the second quarter of this year, up from 38 per cent in 2006.

Those most likely to need help from their parents live in the most expensive regions of the country such as London and the south.

The council said first-time buyers were failing to benefit from house price falls because banks were tightening their lending criteria and demanding increasingly large deposits.

As a result, many are still finding it difficult to buy their first home despite steep falls in the cost of property. During the second quarter of the year, the typical first-time buyer in the UK put down a £19,000 deposit, up from £14,500 during the same three months of 2007.

The council report said: "The effect of lenders cutting back on loan-to-value ratios and income multiples means that the number of unassisted buyers is shrinking further. First-time buyers, a key source of liquidity in the property market, are becoming more reliant than ever on help from their parents."

The group said the average assisted first-time buyer in Britain put down a £35,000 deposit during the second quarter, compared with one of £7,500 for buyers who did not receive any help. Those who had parental support were typically able to borrow just three quarters of their property's value and qualify for a more competitive mortgage rate. Unassisted buyers had to borrow an average of almost 95 per cent of their home's value, increasing the mortgage rate they paid.

The council said the market still appeared to be "some way off" a recovery that would allow most first-time buyers to purchase a home without help. It also warned that with house prices continuing to fall, young buyers may get less help from their parents who have less equity in their own property.

A spokesman for the council added: "If this flow of help for young buyers dries up, then opportunities for young would-be buyers to enter the market could be severely limited, and we may see their numbers decrease significantly beyond what are already record low points."