First-time buyer shortage a concern, says Nationwide

Nationwide's Robert Gardner: "Tentative signs that things are starting to pick-up"

A lack of first-time house buyers in the UK is a "cause for concern", the Nationwide Building Society has said.

Its comments came as it said house prices in January were unchanged from a year earlier, although they had risen by 0.5% compared with the month before.

It said that there were 20,000 first-time buyers a month now compared with 32,000 before the financial crisis.

Housing charity Shelter said that rising rents were preventing people from saving to buy their own property.

Shelter called on the government to do more to dismantle what it is calling the "rent trap".

"Rising rents are leaving people with little or nothing to save at the end of each month, giving them little chance of ever saving enough to climb on to the property ladder," said the charity's chief executive, Campbell Robb.

Signs of improvement

The Nationwide said that first-time buyers were the "lifeblood" of the housing market, accounting for 40% of transactions.

However, credit was less readily available than it had been before the financial crisis, especially for those unable to offer a large deposit.

Natasha Ellis from Exeter

My husband and I are both in our late twenties and have well-paid, professional jobs.

We have been renting together for the last five years and our rent currently costs £850 a month; this is far more than many of our friends are paying for their mortgages.

We save every month but it is going to take us another five years before we are anywhere near having a house deposit.

Yet we can clearly demonstrate that every month we can pay our rent on time and have never missed a payment and both have excellent credit ratings and stable, well-paid jobs. It's just really frustrating.

Of my friends who have bought houses, every single one of them has borrowed the deposit from their parents.

We do not have that luxury and therefore are trapped in the rental market, which feels particularly concerning at the moment for me as we have our first child due in June.

Some friends of ours in a similar situation had to find a new home after their landlord decided to sell the house on finding out they were having children. I just hope our landlord will not react in the same way.

It highlighted the fact that the average buyer getting on the ladder for the first time needed to find a deposit of 20% of a home's value, compared with 10% before the crisis.

The average home was now valued at £162,245, it said, from figures based on its own mortgage data. This was unchanged compared with January 2012.

Nationwide chief economist Robert Gardner said that there were some signs that conditions were improving for first-time buyers, but this depended on a bigger economic picture.

"The most decisive factor in achieving a sustained increase in first-time buyer numbers is likely to be the performance of the wider economy - especially the labour market," he said.

"We, along with most forecasters, expect the UK economy to pick up the pace in the quarters ahead, though progress is likely to be gradual."

Mark Harris, of mortgage broker SPF Private Clients, said: "The vast majority of regions saw price falls throughout 2012. London continues to buck the trend, with heightened competition in parts of the capital, particularly prime central London.

"Transactions continue to be well down on the height of the market, contributing to significant price discrepancies in some areas.

"On the lending front, the picture continues to improve, with some of the cheapest mortgages ever seen," he added.

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