House prices are set to suffer as spending cuts put a further squeeze on first-time buyers and public-sector job losses mount, industry experts warned today.
The rising financial burden on younger, would-be buyers could lead to a "stagnant" property market, according to Spicehaart director Alison Beech.
"As well as facing higher contributions to university fees, young people may struggle to find employment as they come up against heightened competition in the jobs market," she said.
"This will result in fewer first-time buyers getting a foot on the property ladder, which will have a knock-on effect on the market as a whole, causing continued stagnation."
Younger buyers are also struggling to build up deposits, while a lending drought has caused mortgage approvals to fall to their lowest level since April last year. The average age of an unassisted first-time buyer has risen to 37, according to the Council of Mortgage Lenders.
Plans to axe almost 500,000 public sector jobs may also hit prices and confidence, property consultancy Carter Jonas added.
Head of research Catherine Penman said: "The residential market generally may be affected by the growing number of public-sector redundancies and by a reduced mobility as staff are less likely to move from one job to another."
But the top end of the London market has been insulated from the gloomy conditions as international money pours into £5 million-plus homes, according to prime London property consultant Charles McDowell.
