First time buyers (FTBs) are facing an uphill struggle to get onto the property ladder, as new statistics show a wide discrepancy between house prices and earnings.
According to the new figures from the Council of Mortgage Lenders (CML), the cost of an FTB property in July was 3.24 times the average annual income, the biggest the gap has ever been.
Moreover, mortgage repayments continue to eat into FTBs' wages, accounting for 16.7 per cent of total income after a fourth consecutive monthly rise and are expected to continue increasing due to August's increase in the interest rate.
Director general Michael Cougan explained: "First-time buyers are continuing to find ways of getting a toehold on the property ladder, showing just how popular home-ownership is to many young people.
"But higher income multiples, coupled with higher interest payments as a proportion of income, suggests that they are continuing to stretch themselves to do so."
Commenting on the CML's findings, economist Howard Archer warned that should FTB income multiples continue to increase in this way then young buyers will be forced out of the market, causing house prices to fall.
He warned that the likely prospect of another interest rate hike before the year is through could add to pressure that rising utility bills and unemployment is already exerting on young homebuyers.To read more about mortgages, click here.
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