Risk of property log-jam as first-time buyers stay away

The number of people buying their first home fell to a record low last month, dashing hopes that more first-time buyers were joining the market, the National Association of Estate Agents (NAEA) said.

First-time buyers accounted for 13 per cent of sales in August, compared with a long-term average of 25 per cent. The fall follows a slight recovery in the number of people buying their first home in July, when they accounted for 17 per cent of sales, up from 14 per cent in May, the previous low.

The group called for the Government and lenders to help people to buy their first home. Melfyn Williams, president of the NAEA, said: "While the market is not in recession, the acute shortage of first-time buyers is threatening to log-jam sales in progress higher up the value chain.

"Without first-time buyers the market could falter due to large chains of agreed deals being unable to complete.

"I call on the Government and lenders to take action to encourage the first-time buyer back into the market.'' Lenders were being over-cautious in the amount they would let people borrow despite interest rates being at their lowest level for more than 50 years. He said lenders should also introduce guarantor mortgages, under which people could borrow more if their parents acted as guarantors. Mr Williams said: "The Government should also encourage first-time buyers, and abolishing stamp duty for first-time purchases would be a welcome step."

The NAEA said annual house price inflation continued to fall in August, with prices 6.9 per cent higher than in the same month of 2002, compared with annual house price growth of 18 per cent in January.

It said an average of 17 viewings were needed to sell a house compared with 15.7 the previous month, while people were getting 95.6 per cent of their asking price, down from 96.6 per cent in July. But the number of sales rose to 14.7 properties per agent, compared with 11.1 last month.

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