First-time buyers 'at new low'

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An estimated 300,000 first-time buyers entered the market in 2007 - 15,000 less than the total a year earlier - as soaring prices make homes increasingly unaffordable, mortgage lender Halifax said.

However, industry experts have offered hope to beleaguered prospective buyers, saying conditions may improve in 2008 as the UK property market cools.

Halifax's annual First Time Buyer Review found the average house was out of the reach of a typical first-time buyer in 96% of all UK towns. The average price paid by a first-time buyer increased 15% during the year to £175,093 and has soared 82% over the past five years, it added.

Martin Ellis, Halifax chief economist, said rising property values have priced many potential buyers out of the housing market.

"When they do enter the market, first-time buyers are now more likely to be in their 30s rather than their 20s 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."

He said the financial position of most first-time buyers is sound, with purchasers typically putting down a deposit of 20% - equivalent to a year's earnings.

"There is no quick fix to the first-time buyer problem. A more subdued housing market over the next few years is a positive step for potential new entrants.

"Lower than average earnings house price growth together with more government initiatives may, in time, address the issue," he added.