First-time buyers still struggling in market

GfK's Financial Research Survey suggests 347,000 people took out a mortgage for the first time in the year to February 2010.

This is up slightly on the 331,374 seen the year before – which marked the first reading below 350,000 since the survey began in 1993.

But the number of first-time buyers has failed to lift significantly despite last year's stamp duty holiday on properties costing up to 175,000.

The figure also compares with a high of more than 700,000 in 2004/5 and an annual average of 561,000, while it is 100,000 fewer than the lows seen in the recession of the early 1990s, said GfK.

The group added that onerous deposit requirements would mean the Government's recent move to offer stamp duty relief to all first-time buyers on properties up to 250,000 would not provide much support.

Banks are demanding far higher deposits since the credit crunch struck, meaning that first-time buyers must often save tens of thousands of pounds before they can get a foot on the ladder.

This, coupled with rising house prices, has seen the average age of a first-time buyer rise to 32 compared to 31 in 1991, said GfK.

"Lack of deposit capital is at the root of this problem, as fewer than one in six hold sufficient funds to make the necessary down-payment," said GfK. "This shortfall makes it unlikely that the increased stamp duty allowance will have any effect on young people's prospects for home ownership."

But as first-time buyer numbers are in decline, GfK has found that an increasing proportion of first-time mortgages are being granted to the over-50s as baby-boomers buy up properties for their children, who are 'locked out' of the housing market.

Many over 50s are also buying properties for themselves as retirement investments, putting further pressure on the housing market and affordability for first-time buyers.

Ben Steer, financial director at GfK, said: "Increased prudence on the part of lenders has priced many out of the housing market – the challenge for these financial providers is to create products which will assist young people, without creating the conditions that sparked the crisis in the first place."

n House-hunters queued from 4.30am earlier this week in a bid to bag an affordable new apartment at a housing development, the constructor said.

Over 40 eager potential purchasers queued up for Taylor Wimpey's new Meridian development which was launched in Bristol.

The high demand for the new builds, described as "cutting edge city centre apartments" and priced from 100,000, was described as a positive sign by the company.

The development of one, two and three bedroom homes is Taylor Wimpey's first collection of city centre apartments in Bristol for some years.

Richard Goad, regional sales and marketing director for Taylor Wimpey, said: "It's been some time since I last saw people queuing up to purchase properties and this is such a positive sign.

"The apartments at Meridian offer great value for money compared to other city centre properties."