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First-time buyers face a growing housing shortage

Halifax is warning that the shortage of new homes in the UK could be as high as 500,000 by 2021, bolstering house prices and making it harder for first-time buyers to get a foot on the property ladder.

Halifax predicts that the cumulative shortage will reach 500,000 if the number of new houses, particularly in London and the South-east, does not increase beyond the 200,000 currently built each year.

It says this shortage has fueled the housing boom over the past three years and is one of the reasons why prices keep rising.

Meanwhile, the Halifax house-price index shows that the number of first-time buyers in the first half of 2003 reached the lowest level since records began in 1974, falling to 174,000 from 253,000 in the same period last year.

The average price paid by a first-time buyer has risen by 128 per cent over the last decade to £103,294 from £45,249, with an average deposit of £18,950 compared with £5,433 10 years ago.

But Halifax says the barriers facing first-time buyers are lessening demand and easing house price growth.

Its research shows that house prices increased by 1.3 per cent in July to an average of £132,079. Annual house price inflation is 19.2 per cent.

The number of property transactions in England and Wales over the last six months was down by 13 per cent to 680,000 from 780,000 in the same period last year, according to Inland Revenue statistics.

Chief economist Martin Ellis says: “The housing market is strong. With mortgage rates at a 50-year low, benign employment prospects and affordability levels well below the long-term average, the housing market continues to be underpinned by strong fundamentals.”


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