First-time buyer prices moving further out of reach

More evidence has emerged of the difficulties facing people attempting to get their feet on the housing ladder.

In the year to January 2014, the average first-time buyer purchase price rose 16% to a record high of £155,832.

The latest First Time Buyer Tracker from LSL Property Services said this equated to a 3.3% monthly increase in purchase price - or £5000.

As a result, a record deposit is needed - averaging at £27,519, up from £26,963 in a year.

LSL said that for the first time in seven months, deposits were growing as a proportion of income. The average deposit represented 75.1% of a first-time buyer's income in January 2014, up from 74.7% in December 2013 due to differing speeds of recovery in the economy.

Director David Newnes said: "While the property market has been firing forwards, wage growth has been stuck in the mud of the economic recovery. Prices for first-time buyer properties have been marching steadily upwards, and have now reached a new record."

Despite the increases Newnes believes that improvements in lending are helping prospective first-time buyers bridge the gap.

"The property market has remained accessible to first-time buyers, because an increase in high LTV lending has offset rising prices," he said.

"This is enabling more first-time buyers to enter the market."