Housing 1: First home requires £29,000 deposit

The typical first-time buyer put down a deposit of 28,770 during 2010 –the equivalent of 21 per cent of the value of the home they were buying, according to mortgage lender Halifax.

The figure is nearly three times the typical deposit of 9,865 saved by people buying their first home in 2000.

The huge deposits are due to a combination of house price rises during the past decade, as well as banks and building societies tightening their lending criteria as a result of the credit crunch.

But it would take a first-time buyer on an average salary of 25,000 18 months to raise the money they need if they saved every penny they earned after tax, while it would take them 15 years to amass the sum if they set aside 10 per cent of their take-home pay each month.

The large deposits being put down has led to a significant increase in the average age of a first-time buyer.

Although the typical age of someone buying their home during 2010 remained unchanged at 29, the Council of Mortgage Lenders estimates that between 80 per cent and 85 per cent of these buyers received help from family and friends.

The average age of someone getting on to the property ladder who did not receive financial assistance jumped to 36, up from 33 in 2007.

The high deposits lenders are currently demanding from borrowers in order for them to qualify for their best rates is preventing many first-time buyers from taking advantage of considerable improvements in affordability seen since house prices first started to fall in 2007.

Around 40 per cent of local authority areas are now affordable for first-time buyers, based on house prices being less than four times average local earnings, compared with just 6 per cent in 2007 – the year in which house prices peaked.

Halifax said the average price paid for a home by a first-time buyer had more than doubled during the past decade, rising from 68,644 in 2000 to 138,682 now.

Homeowners have now collectively injected 49.7bn into their housing equity since the trend began in the second quarter of 2008.

The rate at which people are reducing their mortgages accelerated for the third quarter in a row during the three months to the end of September, with the latest figure up on the 5.77bn injection recorded during the second quarter of the year.

But the figure remains slightly down on the peak seen during the first quarter of 2009, when the economic downturn and falling house prices led to homeowners injecting 6.71bn back into their properties.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The 10th successive, and increased, net injection of housing equity in the third quarter indicates that there is an ongoing desire and perceived need of many people to improve their personal balance sheets given high debt levels and serious concerns and uncertainties over the economic situation.

"Furthermore, extremely low savings interest rates have made it much more attractive for many people to use any spare funds that they have to reduce their mortgages."

House prices fell by 20 per cent between 2007 and their trough in 2009, but went on to claw back around half of those losses as a shortage of homes on the market helped to underpin prices.

Economists' forecasts for house price changes for 2011 range from falls of 10 per cent to rises of 2 per cent.