Prices fall but the cost of borrowing remains high
A new report has suggested that despite fears of negative equity for current homeowners, the falling prices will benefit first time buyers who have, until recently been priced out of the market.
The analysts Hometrack say a 10% fall in prices will enable a fifth of those currently priced out of the market to buy a two- or three-bedroom home.
Their report says 28% of young people in work in the UK are unable to buy even their cheapest local properties. The situation is worst in London, followed by south-west England.
The most affordable part of the country for home buyers is the North East where only 17% of young households are priced out of home ownership.
However, while house prices are falling, access to the property market is being increasingly limited by the costs and more restrictive terms of a substantially reduced supply of mortgage finance.
The cost of repaying a mortgage rose by 12% last year, which meant in turn that the cost of paying back a home loan rose to 34.5% of average incomes for first-time buyers.
