Loan blow for first-time buyers

THE full crisis faced by first-time house buyers is shown in new research today. Figures from the Halifax bank show that even in London's cheapest borough - Barking and Dagenham - the average first-time buyer would have to borrow almost four times their salary to secure a home.

In the most expensive area - Kensington and Chelsea - a buyer would have to borrow more than 10 times their salary, putting them at serious risk of being unable to keep up with repayments. The recommended safe limit for mortgage lending is 3.5 times salary.

Chartered surveyor Simon Agace, chairman of the Winkworth chain of estate agents in London and Yorkshire, said: 'These figures reveal the stark choices facing London workers aspiring to home ownership. They can either borrow unsafely large multiples of their earnings, continue to rent in the hope that prices will fall - or consider leaving London, and perhaps the South East, altogether.'

The figures also show that the average salary of a first-time buyer in London now stands at £40,000 - indicating that would be homeowners are delaying their move on to the property ladder until they are well established in their careers.

According to the latest figures, the average age of London's first-time buyers has shot up from 32 in 2002 to 35 in 2003. As prices continue to surge, this figure will only increase.

By delaying the age at which people can buy a home, experts believe that the whole demographic profile of Londoners could be altered - if young couples cannot afford to settle down they may delay, or even give up on, the idea of marriage and family.

Ceridwen Roberts, former director of the Family Policy Studies Centre, said that by delaying motherhood a generation of women might end up missing out altogether: 'Women do know about the biological clock and that it's better to have babies when they're younger, but still think that it's easy to have a child at 45, and it's not,' she said.

The figures are especially alarming for key public sector workers, all of whom earn much less than £40,000. A full-time teacher in a primary secondary school earns £30,250, a nurse £24,000 and a police officer at the rank of sergeant or below £31,450.

Shane O'Riordain of Halifax said: 'In London and the South East the recruitment and retention of key public sector workers will become more and more of a problem, and first-time buyers will find the going tough again this year as house-price growth continues.'

Another serious problem facing would be homeowners is that the average London property now attracts Stamp Duty at 3%, which adds around £8,000 to the purchase cost for many first-time buyers.

In the run-up to this week's Budget, the Chancellor is being urged by most industry experts to consider exemptions from Stamp Duty for genuine first-time buyers when purchasing property at prices below the regional average.

A spokesman for the Royal Institution of Chartered Surveyors said: 'Abolishing stamp duty for first-time buyers would help those struggling to get a toe on the housing ladder.

'Equally, first-time buyers would benefit from a doubling in the stamp duty threshold to at least £120,000 and then for it to be kept approximately in line with house-price inflation.'