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Easier first step on to housing ladder

Affordability is returning to the housing market as young people find it easier to make their first mortgage payment than they did a decade ago.

Research from Barclays Consumer Confidence Research shows house prices fell by 7 per cent in July compared with the same period a year ago.

Although 54 per cent of owners expect the value of their home to rise, this is lower than earlier in the year, when 60 per cent were optimistic about the value of their property.

According to the Council of Mortgage Lenders, initial mortgage payments now stand at 15 per cent of income for first-time buyers. This compares with the mid-1990s when payments stood at more than 25 per cent of income.

The CML says while hot spots such as London and parts of the South-east are still feeling the impact of house price increases, affordability overall remains excellent.

Deputy director general Peter Williams says: “Future affordability depends on the costs both of property itself and of the debt associated with acquiring property. The housing market itself should be more stable and less prone to the boom and bust we saw a decade ago.”

Barclays mortgages director John King says: “Now that affordability is returning to the housing market, homebuying activity is likely to increase although not to the levels of recent years. Generally, mortgages are at their most competitive ever and this should help to keep the market moving despite the current lull.”

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