House price hikes making life difficult for first-time buyers

09 March 2004
Young people are being pushed out of the housing market by huge prices, according to a government report.

Figures provided by the Office of the Deputy Prime Minister suggest that the inflation rate for first-time buyers shot to 12.1 per cent in January, having been six per cent in December.

And this rise is having a crippling effect on first time buyers. Last month Halifax revealed the number of first-time buyers has collapsed from 526,000 in 2002 to only 355,000 in 2003, the lowest since records began 30 years ago.

The Halifax research suggests that the dream of buying a first home is now almost entirely unattainable for first time buyers in eight out of 10 British towns, with Hemel Hempstead being the town listed by the researchers as the least affordable town in the UK.

The Halifax said those who did succeed in buying their first home in 2003 paid an average of 17 per cent more than their counterparts in 2002. Over the year, the typical price jumped from £96,007 to £112,541.

With house prices rising all the time, Nationwide has called on the government to act on stamp duty. The bank has warned that 98 percent of first-time buyers in London pay stamp duty compared with 43 per cent 10 years ago, largely due a vast increase in the number of house priced above £60,000.