First-time buyers' struggle extends north

The property divide between the north and south is closing as northern house prices have continued to rise while those in southern areas have stabilised, figures showed today.

In the south, house price growth ground to a halt in 2005, as previous years' property rises had priced many people out of the market, but in northern regions rises in property prices have continued to outstrip increases in average earnings, according to National Savings & Investments (NS&I).

During the past year, the average amount of time it takes a first-time buyer to save a 5% deposit has increased by three months to average four years and nine months, as the typical cost of a starter home has increased from £143,743 to £153,032.

At the same time, NS&I said, the average size of a deposit has risen by £465 to £7,652, although this is less than half the increase seen between the first quarter of 2004 and the same period of 2005, showing that the housing market has cooled.

The group added that during the past six months the average time taken to save for a deposit has remained stable in seven out of 12 regions of the UK.

But while people trying to get on to the property ladder in the south have seen little change in the amount of time it takes to save for a deposit during the past year, those in northern regions have seen big increases.

First-time buyers in Scotland have been hardest hit over the past year, as the buoyant housing market north of the border has increased the average time it takes to save a deposit by 12 months to reach four years and six months.

People trying to buy their first home in Scotland now have to save for the same amount of time as those in the south-east.

House price gains have also outstripped rises in earnings in northern regions of England, increasing the amount of time it takes to save in these areas by nine months during the past year, to four years and six months in the north-east and north-west, and four years and three months in Yorkshire and Humberside.

By contrast, the time it takes the average first-time buyer to get a deposit together in the south-east and south-west has remained unchanged during the past year, while in London and the East Midlands it has increased by three months.

People living in the east of England have to save for the longest, at an average of five years, followed by those in London at four years and nine months, while people in Northern Ireland take an average of just four years to get a 5% deposit together.

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