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Need for big deposit hits home sales hard 31 August 2010
Philip Aldrick (about the author)

The housing market is under threat from a shortage of first-time buyers as they are priced off the property ladder by the large deposits needed, new research shows.

Just one in five prospective buyers is making a first purchase, the lowest on record and half the level needed for a stable housing market, according to property website Rightmove. Without a ready supply of new buyers underpinning transactions, property chains may collapse, pulling down prices all the way to the top.

Miles Shipside, director of Rightmove, said: "With the number of prospective buyers at the bottom of the chain being half normal levels, the question sellers further up the chain will be asking is, 'Who will be at the bottom of my chain?'"

He added that banks are demanding larger deposits, making mortgages less accessible to first-timers.

Assistance from parents

Mr Shipside said: "Due to the new deposit rules they have to play by, it comes as no surprise that they are staying away as they are probably busy saving."

First-time-buyers need on average a 25pc deposit now compared with 10pc before the financial crisis.

Data from the Council of Mortgage Lenders shows that 80pc of first-time-buyers under 30 need assistance from parents, and that the average age of an unassisted first-time-buyer has risen from 33 to 37 in the past five years.

Most economists now forecast house prices to fall in real terms, once adjusted for inflation, for several years.

Source: The Telegraph