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The initial cost of becoming a home purchaser in Great Britain has worsened by 351% since 1996.

According to the Royal Institute of Chartered Surveyors, a first-time buyer couple, both on average lower quartile earnings will now have to save up to the equivalent of 104% of joint take home pay for the up-front buying costs on a typical UK home.
 
This figure is a 351% rise from the low point of 23% of wages needed for a purchase in 1996.

Prospective home-buyers now need to put down £27,729 if they want to secure a home, but average lower quartile wages only stretch to £26,595.
 
This means if a young couple wants to get on the housing ladder they will have to find an extra £1,134 a year on top of all the other costs of living in 21st century Britain.

Since 1996, first-time buyer house prices in Great Britain have risen at an annual rate of 10.6%. In contrast, the government’s annual survey of household earnings shows that the compound growth rate of lower quartile earnings has only been 3.5% a year.

The main drivers of this steady rise in costs were the reductions in loan-to-value ratios that lenders were offering first-timers, as well as stamp duty and the extra costs of buying a home.

Affordability problems are still close to record levels – a couple on lower quartile income now has to spend 40.3% of their combined take home pay for their mortgage, 8% below the all time high of 47.8% during the housing boom of 1990.
 
David Stubbs, senior economist at RICS, says: “Those who are struggling with mortgage repayments are still faced with paying a large percentage of take home pay.

“At the start of 2008, first-time buyers are finding it even harder to get a foothold on the housing ladder and the signs are that conditions are unlikely to get better in the short term.”

This news comes as it was also revealed this week that families in the UK are now spending more on servicing their housing than they are on their food.

This means if first-time buyers do get beyond the initial hurdles of up-front costs, their monthly outgoings will be drastically cut just to be able to meet mortgage demands.

The latest family spending survey by the Office of National Statistics says housing, which includes mortgage payments and rent, is now the single largest item people have to shell out on during the year by taking 19% of overall UK families’ spending.

Every week, food contributed £47, or 15%, to weekly household spending.

The latest survey is the 50th annual spending survey by the government and shows that spending on housing has risen 10% from the 9% spent on housing costs in 1957. In 1957 foodstuffs accounted for the highest proportion of average weekly budget, taking up a third of the overall household bill.

Average weekly household expenditure was highest among households consisting of three or more adults and children at £700 a week.

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