First-time buyers may face steeper climb

Martin Ellis, housing economist at Halifax said: "There must be some sort of ceiling on it, you can't forever get that ratio being

stretched. It is probably gone as far as it could go."

But he warned: "Unless we can get the supply and demand in a balance then that is going to lead to more upwards pressure on that ratio of prices to earnings."

The research for the Halifax found that homes are less affordable than they were 50 years ago because prices almost quadrupled in real terms,.

A study of trends over the 50 years found average house prices after allowing for inflation increased 273 per cent. This was an annual rate of 2.7 per cent, which outstripped average real earnings growth of two per cent.

Mr Ellis said the disparity between wage growth and house price

increases could partly be explained by cultural changes.

During the half-century there has been a shift from one-income to two-wage households as more and more women enter careers but this was balanced by a "significant" rise in single person households, from less than one in five in England in 1971 to one in three by last year.

The Halifax report revealed the number of houses built in the UK last year was 44 per cent less than the 281,570 built 50 years before and this lack of supply has also kept prices rising.

While house building reached a peak in the 1960s, a fall off in public sector completions has driven the subsequent decline.

Despite price increases the UK's fondness for home-ownership has gone from strength to strength – boosted by the Tory government's council house sell off in the 1980s - rising from 43 per cent in 1961 to 68 per cent in 2008.

This has gone hand in hand with a fall in the proportion of privately rented homes, from 33 per cent in 1961 to 14 per cent in 2008.

"As people in general become better off they are probably happy to spend a greater proportion of their income on housing because they have taken care of some of the more basic items," Mr Ellis said.

While there has been a big rise in property prices in the last 50 years, the report shows how inconsistent the climb can be.

It found that each period of rapid rises was followed by a significant fall in real prices, with declines in one of every three years, or 15 out of 50.

The 2000s saw the biggest jump in real prices, with an increase of 62 per cent; the 1990s was the worst decade and prices slumped 22 per cent.

"In terms of the long-term, housing is going to remain generating good returns," Mr Ellis said.