The average deposit put down by a first-time homebuyer has soared almost fourfold over the past five years, according to research published today.
Buyers are providing an average deposit of £22,547 - compared with just £6,512 in 1998 and equivalent to almost the entire average annual salary for a British worker.
In London, the situation is even more extreme, with people trying to buy their first home having to raise £37,123 - 264 per cent higher than in 1998 - according to market analyst Datamonitor.
The report is the latest to highlight the struggle that young workers and families face to get a foot on the property ladder in an era of soaring house prices.
Last month, Halifax and Nationwide said there were fewer first-time buyers than at any time since records began a generation ago.
Datamonitor said that 29 per cent of all mortgage loans were advanced to new buyers, compared with almost half five years ago and 38 per cent as recently as last year.
"First-time buyers are staying away from the market," said Alex Boorman, the author of the Datamonitor report. "Property prices are being buoyed by other areas such as buy-to-let, where - ironically - growth is fuelled by potential first-time buyers who can't afford today's prices."
Datamonitor said that in 1998, first-time buyers were borrowing an average of £51,038, or 83 per cent of the price of their first home. But by the start of this year, they were borrowing an average of £80,016, which represented 77 per cent of the price of their property.
It said that with the rise in minimum deposit levels, first-time buyers were increasingly forced to borrow money from "a parent, guardian or commercial source".
The report calls on the Government to introduce more incentives for developers to build high quality but affordable housing, saying increased supply would help to keep prices down.
It called on larger lenders to follow the lead of some of the smaller banks and introduce more innovative products aimed at first-time buyers.
This could include loans which took expected increases in a borrower's salary into account, or offered to lend more if parents were willing to act as guarantors.
Mr Boorman said: "In addressing the first-time buyer problem, there is therefore a role for lenders, Government and even for property developers who must ensure that they provide attractive but affordable housing.
"Until all three parties take action, the problem will remain and could very well get worse."
- More about:
- Halifax (bank)
- Housing Prices
- Loans And Lending Market
- Nationwide Building Society