First-time buyer crisis

The full scale of London's first-time buyer crisis is revealed today.

New figures show that large swathes of the capital have become virtual no-go areas for people trying to get a toehold on the property ladder.

Across the capital the proportion of new buyers has dropped by half in a decade.

Many simply cannot raise the finance to buy even a tiny one-bedroom-flat priced at seven or eight times their salaries. This is having a devastating impact on the market as a whole.

Research carried out for the Evening Standard shows that in expensive areas such as Richmond only 14 per cent of buyers now fall into the "first-time" category. This compares with 38 per cent in 1994.

Other traditional residential areas with a high proportion of family homes have also priced themselves beyond the reach of all but the wealthiest new buyers.

In Bromley only 17 per cent of buyers were first timers, down from 40 per cent in 1994.

In fact, the figures show a steady and alarming decline in first-time buyer activity throughout London, not just in the most expensive neighbourhoods. The lack of "fresh blood" is having a depressing effect on the whole market by stopping owners from trading up to the next level.

London's cheapest borough, Barking and Dagenham, is the only one to see the proportion of first-time buyers steady in the past decade, at 68 per cent.

The sharpest fall of all was in Tower Hamlets, which in 1994 was still largely a deprived part of the East End. Its success, reflected in

massively higher property prices in much of the former Docklands, also succeeded in driving out the first-time buyers whose numbers plummeted from 65 per cent to 29 per cent.

The Halifax analysis echoes figures from the Council of Mortgage Lenders (CML), which also show a dramatic fall in first-time buyers in London over five years. In 1999 the CML recorded 150,000 home loans, of which more than half, 83,000, were taken by first-time buyers. But last year, out of a total of 131,000 home loans in London, only 50,000 were to first-timers.

Halifax chief economist Martin Ellis said: "The high level of property prices is also causing acute problems for key public sector workers getting onto the housing ladder and is making it very difficult to recruit and retain them.

"There is also an upward trend for people who are not related to buy property together, which can have its own potential pitfalls.

"We believe the Government should help first-time buyers by raising the lowest stamp duty threshold and linking it to house price inflation in future."

Bernard Clarke of the Council of Mortgage Lenders said: "The number of firsttime buyers in London has gone down by 40 per cent in the last five years, largely because so many of them have simply been priced out of the market.

"Over that period, the price for an average first-time buyer in London has gone up by 60 per cent, while their incomes have risen by only a third."