Fresh warnings on housing costs
House price inflation is expected to ease over the rest of 2007. The increase in mortgage rates since last summer is having an effect on housing affordability and will bite further during the coming months. Negative real earnings growth so far this year - average earnings increased by 3.3% over the year to June 2007 against a 4.4% rise in the Retail Price Index - and rising food prices will also reduce the income households have available for housing.(Halifax House Price index August 2007)
The squeeze on home buyers' finances has been highlighted by reports from the T.U.C. and the Royal Institution of Chartered Surveyors RICS Housing Market Survey July 2007 .
The TUC says average English House prices have risen four times faster than pay in the past ten years.
And Rics says first-time buyer couples now need to save almost all their take-home income for a year, to afford a deposit and other up-front costs.
The government said it planned to see two million more homes built by 2016.
According to Rics, a first-time buyer couple would need to save £25,600 to afford an average deposit and stamp duty.
The average joint earnings of a couple in the lowest-paid 25% of the population, in comparison, is £25,899 - just £299 more.
With interest rates rising five times since the summer of 2006, there has been a rise in the number of homes being repossessed from mortgage holders unable to keep up with their financial commitments.
Rics warned that this trend would continue.