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Hope for first-time buyers as affordability improves - The Daily Telegraph

In 2009, the average price paid by a first-time buyer (FTB) was affordable for someone on average earnings in nearly four in ten (39pc) of local authority districts, according to this year's Halifax First-Time Buyer Annual Review.

This compares 2007 when only 6pc of areas were affordable. In 2008 and 2009 around a quarter (24pc) of local authority areas were affordable for those looking to get on the property ladder for the first time.

The proportion of disposable earnings devoted to mortgage payments by a potential new FTB on national average earnings – a measure of affordability that includes the impact of interest rate changes – has almost halved from a peak of 50pc in June 2007 to 27pc in November 2009.

This improvement in affordability has been a result of the combination of lower house prices and interest rate reductions. The current level is below the average over the past 25 years of 34pc.

Halifax admits that tightening in lending criteria since the banking crisis has prevented potential FTBs from getting a property although it says that there are signs that lenders are softening their stance.