'Access to house market worsening'

The costs involved in buying a home and meeting mortgage repayments are among the highest for more than two decades, a study has revealed.

Rising house prices over the past decade mean accessibility is now almost 300% worse than in 1996, dropping to the weak levels seen in 1980, the Royal Institution of Chartered Surveyors (RICS) has said.

Its first accessibility index found a first-time-buyer couple must save 74% of their take-home pay to stump up the £29,200 needed to meet the upfront costs on a typical home, including the deposit and stamp duty.

In contrast, a couple would have needed 25.2% of their take-home pay to afford their first home in 1996.

But the figure is down from a high of 88.4% required in the third quarter of 2004 after lenders raised loan-to-value ratios to help reduce the value of the deposit required in relation to the value of the property.

Homeowners are also increasingly struggling with mortgage repayments, with affordability at its lowest level since 1992.

A two-person household on average incomes of £19,635 now spend 22% of their income on repaying their home loan on an average house price of £147,868, up from 14.1% in 1996.

RICS also predicts that accessibility will get worse with house prices likely to rise by 10% over the next two years.

It expects the current momentum of the housing market to continue into the second half, with property prices set to rise by 7% on last year's level by the end of 2006.

But RICS says the effect of rate rises will hit the market in 2007, with prices likely to rise by just 3%.