Affordability 'has not improved' for first-time buyers

28-Jul-2008

Despite falling house prices, affordability has not improved for first-time buyers, new figures have revealed.

The National Housing Federation's (NHF) Home Truths report claims the credit crunch is preventing conditions from improving for first-time buyers, as lenders redress balance sheets by increasing the cost of mortgages and demanding higher deposits.

In addition, the study says while demand for homes is growing, supply of new housing is falling with only 75 per cent of required property being built each year.

The continued property shortage will see average house prices in England rise by 25 per cent in the next five years, after an initial fall of 2.1 per cent in 2009, the NHF claims.

David Orr, the organisation's chief executive, says: "It's clear that even with house prices falling, affordability hasn't improved one iota.

"In recent months, we have seen mortgage arrears increase, the number of repossessions grow and new mortgages become more difficult to acquire."

Meanwhile, figures released by property intelligence group Hometrack may come as a relief to first-time buyers.

According to the organisation, house prices fell for the tenth successive month in July, reducing by 1.2 per cent while the average cost of a home has dropped 4.4 per cent year-on-year.

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