Dreams of very big house in the country

In your late twenties and renting? One day you may want to own a house like the one you grew up in. Will you ever afford it?

For generations of home owners the property market has been like an escalator. They got on at the bottom and the machinery of rising prices gradually took them up. For today's first-time buyers, the escalator that served their parents so well has broken down. How will they be able to rise up the market when prices are at a standstill?

Those most badly hit by the collapse are between 24 and 36, the prime age for trading up. Nearly one in three who were first-time buyers in 1988 and 1989 are still in negative equity. Many of their peers, shocked by the experience, have gone through their twenties as tenants. Yet despite their enthusiasm for renting, every survey shows that they see it as a short-term option. Ultimately they hope to live in their own home. Will they ever be able to afford it?

Many in the business say the answer is yes - but that they will finance the move differently from their parents. John Brain, chairman of Hamptons, is one of many who believes the desire to provide the best possible home for the family is overwhelming. But he doubts whether any but the most confident double-income families will risk taking out a huge mortgage. However, bonus payments and inheritance could well be used to finance trading up.

Neville Casingena, managing director of the north London agents Goldschmidt and Howland, is seeing a new generation of young purchasers buying their first home with inherited money. "We have a couple who bought their home in Hampstead in 1957 for pounds 9,000," he says. "They recently sold it for pounds 800,000. They have bought themselves a flat in St John's Wood for pounds 400,000 and have given pounds 200,000 each to their two children. We've sold a property to one of those children."

Of course, most parents do not have the odd pounds 400,000 to pass on. Many do have a small lump of money tied up in their home but their biggest fear now is that the money could be swallowed up in nursing-home fees.

What of the children themselves? Noni Ware, 27, grew up in an old rectory in Dorset, the kind of house she would one day love to own. Her parents bought the house for pounds 30,000 in 1974, partly with cash from their previous home. The price represented about four-and-a-half times their income. The same house today would cost more like pounds 300,000. With no equity, this would be impossible to borrow.

When Ms Ware got married last year she and her husband, Ashley Dale, decided to continue renting. "It's in the back of our minds that we will want to buy at some stage, but at the moment the idea of buying a one- bedroom flat doesn't seem worthwhile."

So how will they buy the house in the country, with a garden, which is the kind of place they dream of raising a family? "It depends entirely on what we earn," Noni says.

In particular it depends what the men earn. This generation of late starters plans to enter home ownership at about the same time as they start a family. And they may well find their finances stretched to the limit just as they are having to drop from two incomes to one.

Patrick and Sarah Eve, a newly married couple in their late twenties, acknowledge that they will have to make big sacrifices in order to have the home they want. It is a big leap from their one-bedroom flat in London. "We would both like the sort of house we were brought up in," says Patrick. "It's a top priority, more important than cars or holidays. We'd rather buy the house and make everything else fit.

"To get that we are going to have to spend pounds 150,000 plus. The only way to get that is from me making enough money, or from our families, or from making a profit on our own flat - which I think is unlikely."

His expectations are very different from those of his father, George, who is in the same profession of surveying. George and Belinda Eve, who live in Norfolk, bought their first house for pounds 2,750 in 1963. A few years later they bought an old rectory in three acres for pounds 6,000 from the church.

They sold the rectory for pounds 48,000 in 1978 and bought a six-bedroom house with five holiday cottages in the grounds for pounds 94,500. They sold off the cottages for the same amount six years later and live in a house now worth at least pounds 250,000. "We have consistently been able to make money out of housing," Mr Eve says.

Neville Casingena believes the trading-up dilemma is a case of "where there's a will, there's a way". He thinks couples looking to trade up will decide what kind of house they really want and move to a location where they can afford it. "I have three negotiators, all of whom lived within two miles of the office in Hampstead until they started families," he says. "Now one lives in Watford, one in Bushey and the other in Hampstead Garden Suburb. People want a good environment for their children. If they are not able to afford it in the area where they live, they will move to an area that is cheaper."