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First rung of UK property ladder out of reach for many

First time buyers in the UK hoping to get onto the property ladder will need to save three quarters of their joint take-home pay to afford a deposit and pay for costs, according to the Royal Institution of Chartered Surveyors (RICS).

An accessibility index developed by RICS has found that the cost of buying a home and the ongoing cost of housing are the worst in two decades, as the rise in house prices outpaces pay increases. The institution also forecast worse to come, with house prices predicted to rise by 10% in the next two years.

A first time buyer couple will now have to spend up to the equivalent of 74% of joint take-home pay, to afford the required GBP29,200 deposit and costs to buy a house, compared to the low point of 25.2% in 1996. The increase is due to a sharp rise in the deposit required by first time buyers over the last decade, as lending criteria has tightened and house prices have risen, while the stamp duty threshold has not kept up with house prices.

Affordability is also at its worst levels since 1992, with a two-person household on average incomes now spending 22% of their take-home pay on their mortgage compared to the low point of 14.1% in 1996.

RICS economist David Stubbs said: Unless house building levels improve, and levels keep pace with population growth and rising income and wealth, people will continue to find it difficult to access the housing market. The financial pressures of up front buying costs and rising energy prices will continue to create a ‘have – and have not’ property society.