Data from the ONS shows that the average salary for a worker in their twenties is just under £21,000. If a first-time buyer saves 10% of their monthly salary for a deposit on a house, i.e. £136, it could take them up to 17 years to achieve their objective, according to the Halifax.

The stark reality is that first-time buyers face a nightmare trying to get a foot on the property ladder. The cost of an average first-time buyer property is £138,682 – 6.6 times the average salary of a full-time employee in their twenties. Ten years ago, the same home would have cost £68,644. No wonder that over 80% of people under the age of 30 turn to their parents for help buying a property.

Mortgage lending institutions want people living in London to have an average £56,259 deposit before they will grant them a mortgage. That works out as nearly 25% of the property’s value.

Rising house prices over the last ten years have prevented many people from entering the housing market. In 2000, there were more than half a million first-time buyers – by 2010 the number had fallen to 200,000.

The typical first time buyer in 2010 was 29 and paid a deposit of 21% of the house purchase price. If we take those who get parental help out of the equation, the average age increases to 36. Are things set to improve in 2011?

Most economists expect house prices to continue falling by between 5% and 10%. Whilst this may be good news for house hunters, it does not bode so well for people who currently have a contractor mortgage and find themselves with negative equity.

The housing market has to stabilise eventually but it seems there is a way to go before that happens.

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The high street banks are still reducing the interest rates on their mortgage products in a bid to attract new customers.

The latest to offer reduced rates is Santander. The Spanish banking giant has cut 0.16% off the rate on its 75% LTV two year fixed rate mortgage. The new rate is now 3.89% and attracts a £99 fee. Santander has also cut its 70% LTV mortgage by 0.1% to 3.15% over a 2 year fixed term.

The bank has also reduced the interest rate on its 70%LTV three year fix by 0.08%. The rate now stands at 3.79% although the fee for this deal is £995.

The director of mortgages at Santander, Phil Cliff, said that the bank wanted to make sure it was offering competitive contractor mortgages to its customers.

First-time buyers are not being left out either. The bank has just launched a mortgage exclusively for people who want to buy their first home, which demonstrates Santander’s desire to support the housing market, continued Cliff.

Meanwhile, experts have varying predictions on the short-term future of the housing market. Last month housing prices dropped by 0.3% and now stand at £163,400 which is nearly the same as they were in November 2009 when the average house price was £162,800.

The question on everybody’s mind is what’s going to happen next? Martin Gahbauer from the Nationwide Building Society says that there is little evidence that the price decline will accelerate in the coming months, whereas an expert from Capital Economics believes that prices could drop by as much as 10%. The Office of Budget Responsibility expects to see a fall of 2.7% next year and Howard Archer from IHS Global Insight expects the decline to be more like 6%. There’s is at least one thing that they all agree on; prices are going to continue going down.

In the longer-term, the OBR predicts that house prices will rise by a modest 1.9% in 2012-13, 4% the following year and 4.3% each year in the following two years.

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Some buy to let landlords could start to feel the pinch, after the government announced it is going to make changes to housing benefit rules.

Landlords are already suffering from a lack of mortgage availability and this could start to put a halt on investment. Currently, a lot of buy to let investors are reaping in the benefits as rental income increases at record rates. Rents rose for the 8th consecutive month in September, according to LSL, a property services group.

Demand is high as young people cannot afford to buy their own home and there are not enough available rental properties to supply the market. In London, the average rent rose by 1.1% in September, and rents in the Capital are now at their highest ever level.

However, Chris Norris from the National Landlord Association is warning of potential trouble ahead. He estimates that around 50% of all landlords have some tenants who receive help from the government to pay their rent. Some people think that most of these landlords will not suffer unduly from reduced housing benefit, but research from the NLA paints a different picture. The Association says a lot of landlords will have problems paying their mortgage if their rental income drops.

Problems are also likely to increase for young people looking to buy their first home as the government has announced it plans to cut the budget for affordable housing in half. Even though house prices are falling, they are still far too expensive for the average first time buyer to afford and if rents keep on rising, it seems nigh on impossible for young people to ever get a foot on the housing ladder.

It’s time for the government to have a rethink on the whole subject of housing, which after all is a basic need of all of us.

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Moneyfacts, the online portal that compares financial services, published a report last week that suggests that the buy to let market in the UK is improving.

There are currently 306 mortgage products available for residential buy to let investors. Whilst this is more than 90% less than the 3,648 deals available in July 2007, Moneyfacts says the worst is over.

This time last year, only 45 mortgage lenders were offering buy to let deals. That figure has now increased to 54 as companies like Paragon re-enter the market.

Paragon agrees that the sector appears to be going strong. Research from the specialist buy-to-let lender shows that 17% of all mortgage lending transacted through an intermediary in the last quarter was for buy-to-let products.

Just under 50% of all buy-to-let mortgages obtained through intermediaries were granted to experienced landlords expanding their portfolios. First time landlords accounted for 16% of the mortgages, whilst 33% of the buy to let sales were for remortgages.

The chief executive of Paragon, Nigel Terrington, said that the increasing strength of the buy-to-let market is being driven by landlord confidence. This confidence is likely to continue to rise as potential first time buyers, unable to raise the necessary deposit to get a contractor mortgage, turn to the private rental sector. The UK needs more available rental properties in order to keep pace with the demand, he added.

People forced into the rental market are finding that this demand for properties is pushing up rents. On average, rents across the country are now 3.1% higher than they were last year. Many people now have to pay out between 33% and 50% of their annual salary in rent.

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You now need to put down almost three times the average salary as a deposit if you want to get a contractor mortgage! In September the average home buyers’ deposit was a massive 43%. Four years ago, £50,000 would have been sufficient to meet the then 30% deposit requirement.

And the bad news just keeps on coming. Last week, the Bank of England warned that mortgage lending institutions are becoming stricter amid fears that rising unemployment will lead to more people defaulting on their mortgage.

Meanwhile, surveyors e.surv has discovered that not all purchasers are being treated the same. People buying properties in the lower price bracket typically need a 35% deposit compared to the 25% they needed four years ago. This means the amount they can borrow has decreased by 10%. However, people buying a house worth £500,000 or more have seen their borrowing power reduced by just 4%.

The business development director of e.surv, Richard Sexton, pointed out that 20% of buyers want to purchase a property worth less than £125,000. Typically they will be first time buyers but their access to finance is well behind wealthier home buyers.

House prices are currently declining and interestingly enough now stand at virtually the same level they were four years ago. The difference being that the deposit is now £20,000 more than it was then.

Who could forgive the majority of potential first-time buyers from simply giving up hope?

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According to recently released figures by the CML, Scotland is the place to go if you want to take out an IT contractor mortgage.

In the second quarter of 2010 the number of first time buyer mortgages leapt by 18% to 4,700 compared to the previous quarter. The value of the new mortgages equalled £419m, up 27% on Q1 and 36% more loans were granted to Scots moving home in Q2. Overall, new mortgages rose by 2,900 to 12,700, the highest percentage increase in the UK.

Scottish home movers also used less of their income (9.3%) to pay off their mortgage interest in Q2 compared to other areas of the UK.

First time buyer deposits shrank slightly from 23% to 21% in Q2 showing that some financial institutions are relaxing lending criteria. But, as in the rest of the UK, remortgage activity in Scotland remains very subdued.

Kennedy Foster, policy consultant for CML Scotland, said that recent months have shown positive signs for the Scottish housing market. However, the upward trend might not continue as regulatory and austerity pressures will affect Scotland just the same as other areas of the UK.

The chief executive of Homes for Scotland, Jonathan Fair, was slightly more cautious saying that although the latest figures are encouraging, it must be remembered that the base rate is currently at an all time low and normalised lending is still a distant dream.

The director of research at Savills, Jacqui Daly, says that the housing market in the UK will start to slow down for the rest of the year with the mortgage arena the least profitable. Her comment came after research by Santander found that nearly twice as many attempts by property owners to sell their house have failed than succeeded in the last year.

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Image: Flag Scotland, Ecosse by erjkprunczyk

The Land Registry’s latest quarterly report showed that the annual rate of price inflation in the housing market held steady at 8.2% in May although there was a 0.2% drop in prices during the month. The largest monthly decrease was in the East Midlands, down by 3.6%.

During the last 12 months, London has seen an increase in property values of 14.2% whilst the North East has experienced the lowest growth at just 1.8%.

The number of house sales completed in England and Wales in March this year rose to 48,577; a 37% increase on the corresponding month last year.

A senior partner at Carter Jonas attributes the increase in housing stock to the removal of HIPS and he predicts that prices for more sought-after properties could see further increases.

Anybody who is thinking about moving home or taking out a first time buyer contractor mortgage should take heed of street names according to new research. Buying a property on a Hill’ or ‘Lane’ is likely to set you back 50% more than the national average.

Meanwhile, an increasing number of UK property buyers have turned their attention to properties in France. Athena Mortgages, a French property specialist, received a 100% increase in new buyer enquiries in May compared to the previous month.

The French property market has been growing in confidence over the past year and new build properties have been performing extremely well. French mortgages are competitively priced and the weakening Euro has made France an appealing destination for UK investors looking to purchase a second home.

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Image: Twitter goes up, Twitter goes down… by Dave Delaney