Kim Kinnaird, Halifax’s mortgages director, said elevated borrowing costs and a lack of available homes to buy “is pushing ownership further out of reach for would-be first-time buyers in many parts of the country”.
Despite earnings having doubled since 1997, house prices have increased four-and-a-half times over the same period. Homes are slowly becoming more affordable again – they cost 8.3 times buyers’ incomes last year, down from 8.5 times in 2022, according to the Office for National Statistics.
But house prices still rose by £9,500 on average last year, compared with average earnings increasing by just £1,900 over the same period.
Meanwhile, UK rents have continued to rise – by 6.2pc on existing tenancies in 2023, after rising by 4.2pc in 2022.
Tom Bill, of estate agent Knight Frank, said: “The story of the last two years has been a slowdown in transactions, not prices, which has made renting a cheaper option in some areas – even though the lettings market has suffered from a lack of supply.
“Lenders are also in a much stronger position than during the financial crisis, which means no wave of foreclosures to drive down prices. While the strong labour market is one reason inflation has remained stubbornly high, it has also underpinned buyer demand.
“Given that housing will be one of the issues taking centre stage at the election, it would be surprising if the Government failed to offer any help to first-time buyers.”