First time buyers are still locked out of home ownership despite the fall in house prices, new research for Shelter Scotland reveals.

Figures from the housing charity's annual Roof Affordability Index [1] show the average house price for first time buyers in Scotland is now £96,835, falling 13.4 per cent since a peak of £111,768 in 2007.

But the improvement in affordability which is less than across the UK as a whole is more than offset by a squeeze in lending and a lack of affordable housing, which pre-dates the current financial crisis.

In Scotland in 2000, the average deposit required by a first time buyer would have been £2,323 but by January 2009, that figure was £19,367 [2].

Lack of accessible mortgages was not the only factor holding first time buyers back. Rising repossessions, unemployment, and economic uncertainty were also factors. As a result, the number of first time loans at the end of 2008 had fallen nearly 50 per cent in Scotland since the previous year. [3]

95 per cent mortgages have all but disappeared and it is only in recent days that HSBC has been the first major lender to offer a more competitive rate for those with a 10 per cent deposit.

Graeme Brown, Director of Shelter Scotland, housing and homelessness charity, said: 'Would-be first time buyers face growing difficulty trying to get onto the property ladder. At a time when house prices are falling and interest rates are at historic lows, a new generation should be able to buy a house.

'Instead a squeeze on lending is leaving people locked out of the housing market. Couple this with the hundreds of thousands on waiting lists or in temporary accommodation and it is clear there is no light at the end of the dark tunnel that is Scotland's housing crisis.'

He added: 'Shelter Scotland is calling on lenders to start sensible lending, not just to first time buyers, but for others keen to own their own home. But we must also reverse the shortage of homes that was a key driver in the current economic crisis. The Scottish and UK Governments must make building homes a priority, not just for those keen to buy but also those for whom the homeownership dream will always be just that: a dream.'

The 2009 ROOF Affordability Index shows:

• The average first time buyer dwelling price in Scotland is now £96,835, compared to £46,460 in 2000.
• The average monthly mortgage repayments for first time buyers are now £445.46, compared to £251.82 in 2000.
• Mortgage repayment costs swallow up 11.2 per cent of household incomes, compared with 9.6 in 2000.
• First time buyer prices have fallen 20.5 per cent in the UK since the peak of £156,892 in the fourth quarter of 2007. But first-time buyer prices in Scotland have only fallen 13.4 per cent since a peak of £111,768, in the third quarter of 2007.

Notes for editors

1. The ROOF Affordability Index was devised by Professor Steve Wilcox of York University. For a full breakdown of statistics contact the Shelter media office on 0844 515 2442 (connects to out of hours). Download a one-page summary.
   
   For the UK-wide release, contact 020 7505 2162 or out of hours 07850 901 142. The ROOF Affordability Index provides a unique measure of how easy or difficult households find it to become homeowners. Unlike traditional measures of housing affordability, the index uses average mortgage costs (and hence takes account of variations in interest rates) and uses specially-commissioned data on the incomes of all working households rather than just those households that succeed in accessing the housing market.
2. In 2000, the average first time buyer property was £46,460, requiring a 5 per cent deposit, totaling a deposit of £2,323. In 2009, on an average first time buyer property at £96,835, with the required 20 per cent deposit, the deposit would have totaled, £19,367.
3. CML figures show 4,300 loans to first time buyers in Scotland in the fourth quarter of 2008, compared to 8,500 in same quarter of 2007.
4. To subscribe to ROOF Magazine go to www.roofmag.org.uk/subs