Many will be surprised to learn that over the past six months it has been cheaper and easier to get a mortgage, especially for first-time buyers. Snap them up now, experts say, because they will vanish if the eurozone collapses. But the truth is that any such increases have been marginal to the bigger story about the state of the British housing market.

As are reports that "housing affordability" has improved. A home is deemed affordable when it costs less than four times average yearly earnings. At the peak of the housing boom in 2007 just 5 per cent of properties met that criterion; today 44 per cent of local authority districts in the UK contain "affordable" homes, the highest proportion for eight years.

Let not this seasonal joy be unconfined. The grim reality is that – however competitive mortgage deals may be, and however "affordable" houses may be – people are not buying them. That is particularly true of first-time buyers whose enthusiasm has long been an index of the health and strength of our housing market. Indeed, their number has plummeted to the lowest since records began in 1974. A big problem is the size of deposit they are now expected to produce. The typical figure has soared from 10 per cent of the purchase price in 2007 to 20 per cent today. The average figure is now nearly £30,000, rising to £60,192 in Greater London. The odd 90 or 95 per cent mortgage deal is not much compensation for that.

And yet even large deposits are not the main problem. Economic uncertainty, rather than mortgage availability, has been the greatest constraint, industry experts say. Very few houses are being bought and sold. And most of those are the result of sales forced through job moves, deaths or someone's inability to keep up with the repayments.

Many would-be sellers are staying out of the market until it returns to what they regard as "normal". But this could well turn out to be a form of denial as to the true value of their properties. A crash in prices is unlikely, because demand exceeds supply; new house building is now far behind the rate at which new households are being formed. But it is highly unlikely that prices will return to the days when the only direction was up. The price boom of 2002-7 was an aberration brought on by excessive, and often imprudent, lending by banks and building societies. A return to those ways is unlikely, nor would it be welcome.

There are a few new phenomena. The North-South gap is widening, with many properties in the Midlands and the North within the reach of buyers with a mortgage of £80,000-£95,000. But first-time buyers are effectively blocked from the property ladder all across the South-east. In London – unlike the rest of the UK where the average house fell £2,664 in value last year – prices are slowly rising, as international investment inflates the prices of £5m-plus houses, which pushes prices up across the capital.

A rich-poor gap is emerging, with children of wealthy parents largely the only ones taking the first step onto the property ladder. Buy-to-let mortgages are on the rise again as investors seek to take advantage of rising rents. And a class of "mortgage prisoners" is emerging in poorer areas where home-owners withdrew large chunks of equity from their properties when they re-mortgaged pre-2007. But by and large the housing market is just bumping along the bottom. The traditional Christmas slowdown could well continue throughout 2012.