Property: How much?

A star footballer says houses are too expensive. If he can't afford to buy one, who can?

Poor Michael. He has just arrived in Britain with his young family and is shocked at how much it costs to buy somewhere to live. "London is so expensive," he says with dismay, but then Michael did grow up in a tiny Communist-era flat in the former East Germany. At 27 he is a migrant worker struggling to come to terms with his new surroundings and find a place to call home. "It is better to rent."

But Michael Ballack did not come here to wait tables or fix leaky pipes. He is a professional footballer with Chelsea. He earns £130,000. Every week. When the biggest star at the richest football club in the land rails against the price of property, you know something really is wrong.

Even the International Monetary Fund, which does not usually like to interfere in these things, calls British houses "overvalued". Last week, a day after Ballack's comments, the IMF warned that Britain was heading for a crisis because prices are too high to be sustainable. But tell that to the estate agents.

Prices rose in August for the fifth month running. In the past 10 years they have gone up 170 per cent across the country - and far more in hotspots such as Wimbledon village, where Ballack and his partner Simone are now renting a home for them and their three young sons. Here the glossy colour brochures handed out by estate agents feature Victorian mansions in leafy roads, and well-groomed women in expensive wellingtons walking pedigree dogs on the autumnal common. Only six miles from central London, this community works hard to present itself as a posh, polished facsimile of a rural village. With a Tube station and chi-chi shops.

It has been worth the effort. Ten years ago a family home suitable for the captain of the German national football team would have cost £393,490. So far this year, six have been sold between the High Street and the Common, at an average price of £1,869,166.

How does that make you feel? Smug, possibly, if you already own a home - 70 per cent of the population does - and are experiencing a sensation of rising wealth. Congratulations, your place is worth £100 more than it was yesterday. But if you are one of the 5.5 million people renting while hoping to buy in the future, commiserations. It is not going to get any easier.

Prices are rising faster than wages, increasing the gap between home owners and wannabes. Interest rates and unemployment are creeping up. Buyers are stretching themselves dangerously: first-timers are borrowing, on average, 3.24 times their annual salary - a record high. Some are borrowing six or seven times as much. For homeowners as a whole, on average, the mortgage takes up 42 per cent of wages - a huge increase on the 33 per cent of last year.

Inevitably, some people just cannot cope. The number of properties being seized by lenders is higher than at any time since the property crash of the early Nineties, when every other person seemed to be handing in their keys. Figures released by the Citizens Advice Bureau a few days ago suggest 770,000 people missed at least one mortgage payment last year.

"There is a very high expectation of home ownership," says Peter Tutton of the CAB. "We're not opposed to that, but if you want to encourage it you also have to ensure that lenders are being regulated and there are safety nets for people. That is not happening as it should." Some companies specialise in lending to people nobody else will touch because of bad credit ratings, low incomes or court judgments. They charge fierce rates of interest and go in hard on defaulters - some have repossessed homes from people who initially missed only one or two repayments, worth a couple of thousand pounds.

It is easy to get in trouble, says Mr Tutton. "If you are a council tenant who claims housing benefit, you may exercise the right to buy your place but lose the right to the benefit. We have seen people who did not realise this, and now cannot afford to live in the home they always had."

Margaret Thatcher started the council house sell-off, preaching that everyone had a right to buy. Since then demand has far outstripped supply. More people are living alone these days, the population is growing, and more homes are needed. Every year there are 47,000 more households formed than new houses built. The builders can't work fast enough, partly because they can't get planning permission quickly enough. Even John Prescott's vow to fill the Thames Gateway with cheap boxes is being frustrated by local planners and campaigners. Meanwhile, the right to buy has become an expectation.

"It's like you're only a grown-up if you own bricks and mortar," complains David, who works for a theatre charity in north London. He is in his late twenties, close in age to Michael Ballack. The footballer lives in the same city but it might as well be Mars. David takes an hour and a half to get to work every day, as the nearest place he can afford to rent is in Leyton, east London. Scruffy and ungentrified, this has long been a refuge for people who could afford nowhere else. But even that safe haven is being lost, now the Olympics are coming in 2012, driving property prices up.

David is struggling to raise a deposit. He is not a key worker, so can't have help from the Government. He is tempted by a group loan, which allows up to four people to club together. The number of these has doubled in the past five years, but the idea worries David. "This is more serious than getting married. You're bound to fall out and fight."

While prophets of doom rend their garments and wait for the crash, other people are seeking creative solutions. Across Hackney Marshes from David's flat, a community project has found individuals willing to invest at least £5,000 each in a property. The intention is to sell it for profit the year before the Olympics - after five years of rental at a very low rate to young people with nowhere else to go who are willing to give some time to work for the neighbourhood.

"There is no mortgage," says Chris Lawrence, a community worker making it happen. "Nobody is demanding interest, so you only need charge enough to pay for the upkeep." Houses in the area are already worth 18 per cent more than they were a year ago. "All around us people are bankrupting themselves to get a foot on the property ladder, because they feel they have to," says Mr Lawrence. "It's a trap. But instead of moaning about how expensive houses are, this is a way of flipping that around and making it work for us. Prices will rise, so this is easy to sell as a lucrative investment. Maybe we can spring the trap."

The need for new homes

4,000,000 properties in 10 years is the government target, but demands are growing. Every year there are 47,000 more households formed than houses built

The first step on the ladder

£150,000 is the average price a buyer pays for a first property, typically borrowing 3.24 times their annual salary (although it can be six or seven times as much)

The rising price of a house

£202,660 is the average cost of a house in England, double what it was four years ago. In Scotland it is £140,460; in Wales £156,205; and in Northern Ireland £158,104

The growing cost of moving in

£28,860 is what the average first-time buyer or couple needs to have saved to pay for a deposit and stamp duty. This is three times more than it cost a decade ago

The scandal of empty homes

690,000 properties in the UK are currently unused, 80 per cent of them privately owned. More than a third of newly built homes in south-east England are unoccupied

The return of the repo man

8,140 homes were repossessed in the first six months of the year, up 72 per cent on 2005. There were 165,000 court judgments against debt, the most since 1990