Despite the ongoing credit crunch house prices are still too high for many first time buyers. Unfortunately the current financial situation means it is even harder to secure a mortgage and the cost of borrowing is rapidly rising. Owning a home is now just a dream for many people.  

According to the Roof Affordability Index published by housing charity Shelter, house prices have risen by 200% over the last decade. The average cost of a first time property has risen from £52,674 to £159,494. These figures differ according to region with first time buyers in London experiencing the biggest hike. They now pay around 250% more for their first home than they did 10 years ago, with the average price reaching a staggering £26,000.

The monthly cost of owning a home has also risen dramatically. The average weekly income of working households has risen by 53% from £590 to £900. But the Index shows that mortgage payments have increased during the same period by a dramatic 172% from £304.80 to £827.87. Mortgage repayment costs swallowed up more than 21% of the average working household’s income in 2007, compared to almost 12% in 1997. Shelter says this means it is now on average 78% harder for first time buyers to secure a home than 10 years ago.

 “These new figures show in full the true and worsening situation first time buyers find themselves in,” comments Adam Sampson, Shelter Chief Executive. “Every year the gulf between what first time buyers can afford and the cost of housing is widening. Despite falling house prices, many lenders are increasing their mortgage rates, making an already desperate situation worse. It means there is a generation of young people and young families being locked out of the housing market without a hope of ever sharing in the asset wealth of the generation before.”