'Bad as it's ever been' for first-time buyers

The situation for first-time buyers in the UK property market is presently as "bad as it's ever been", according to campaign website Firstrung.

However, with house prices seemingly on the verge of a major correction, the environment could be about to improve.

"It's as bad as it’s ever been for first-time buyers, but hopefully we are entering the period where it will start to be good again," said Paul Holmes, chief executive of Firstrung.

"Once all the froth disappears from the marketplace then hopefully it will be a time when first time buyers can begin to thrive, but it’s not going to be a short journey."

The Royal Institution of Chartered Surveyors (Rics) reports the house price balance fell for the ninth consecutive month in April 2008, with 95.1 per cent of chartered surveyors reporting a fall in house prices than a rise – up from 79.4 per cent in March.

Furthermore, research from Nationwide released today suggests first-time buyers now spend 49 per cent of their post-tax income on mortgage repayments.

This is the highest level since 1990 – during the depths of the last housing crash and twice the level a decade ago.

"There has never been a time when people in their mid-twenties were thinking about property and saying: 'I could never do that unless prices crash by 50 per cent or granny dies and leaves me £100,000'", continued Mr Holmes.

"It’s absolutely bizarre. It has to change and it will change, because now that the cheap credit has been stripped out of the market place there is only one way for this market, and that is to be affordable."

The Land Registry reported in April 2008, house sales between September and December 2007 were down to 90,880 per month - compared to 117,301 for the same period last year, illustrating an acutely depressed market.

"Certain houses will always be unaffordable but what you should be able to do is think: 'I’m in my first or second job, my careers going well. Can I afford to buy as opposed to rent? And you can’t', and that has to change," concluded Mr Holmes.

Chris O'Toole