Property ladder moves further out of first-time buyers' reach

The average price of a home for first-time buyers in London is now ?187,690, Britain's biggest mortgage lender said today.

Halifax added that, with the average salary commanded by first-time buyers in the capital put at ?40,000, they face having to borrow five times their salary to take their first step onto the property ladder. Alternatively they would have to try to save a deposit of ?42,000, to reduce their lending multiple to three-and-a-half times their income - the amount normally lent by mortgage companies.

Martin Ellis, chief economist at Halifax, said: "First-time buyers in London face particular hardships in getting on the housing ladder.

"The average first-time buyer now has to find a deposit which even dual income households could have difficulty raising.

"Specific government action such as targeted grants for first-time buyers or key workers could be a way forward."

The figures come a day after the National Association of Estate Agents said that during May the number of first-time buyers entering the market across the UK fell to just 14%, from an average of 25% during 2002, as recent steep price rises pushed home ownership out of reach for swathes of the population.

A report published last month by the Joseph Rowntree Foundation found that people in their 20s and 30s and key workers such as nurses and teachers found it harder to get on to the property ladder in London than anywhere else in the country. The group said the City of London, Barking & Dagenham and Merton were the only local authorities where house prices were less than four times higher than average incomes.