It is now almost impossible for a low income couple to become home owners in Great Britain according to the Royal Institute of Chartered Surveyors (RICS) accessibility and affordability indices.

A first time buyer couple, earning lower quartile earnings (totalling £27,516 after taxes), will now have to save over 100% of their joint take home pay, to build up the £27,738 needed for the up front buying costs on a typical home (including the deposit, fees and stamp duty). This equates to a substantial rise from the low point of 21% of income required in 1996.

This worsening accessibility recorded by RICS has been driven by the reductions in loan-to-value ratios that lenders are offering buyers, as well as the continued burden of stamp duty and the other costs of buying a home. Lenders are forcing would-be buyers to put up more money for deposits and given that real income growth has stagnated.


However, affordability has improved for those lucky enough to be able to access the market. A couple on lower quartile incomes now has to spend 34.5% of their combined take home pay to service their mortgage. The improvement in affordability can be attributed to falling prices and tighter lending conditions. Smaller mortgages mean smaller repayments in a time when interest rates are relatively low.

RICS Senior Economist David Stubbs, said: "Access to the housing market has deteriorated as the credit crunch has taken hold of the mortgage lender sector. With mortgage approvals declining, the picture does not look like improving in the latter part of 2008 and first time buyers will find their path to home ownership increasingly blocked.

"Those who are able to access the housing market, will find that a bigger deposit will mean that mortgage repayments are reduced but with real incomes stagnating this will seem like light relief only. Homeowners' finances will continue to struggle with rising food and fuel costs making the burden of mortgage repayments even more difficult."

(CD/JM)