First-time house buyers are finding the first rung of the property ladder is higher than ever.

According to National Savings and Investments (NS&I), it takes people living in the South-East a year longer to save for a house deposit than it did a decade ago.

Research revealed most first-time buyers have to save for four years before they can afford a five per cent deposit on a property.

NS&I put the extra time down to the fact average income increases of 68 per cent in a decade have not matched increases in house prices, which have risen by 142 per cent.

Gill Cattanach, marketing director at NS&I, said "The growing gap between increases in house prices and incomes means those thinking about buying homes need to start saving earlier.

"We're urging first-time buyers to start saving now and to continue saving on a regular basis. Even a little bit extra tucked away in a savings account each month could reduce significantly the period of time first-time buyers have to wait until they can enjoy the excitement of moving into their first home."

In the South-East, first-time buyers have the longest wait to save at 48 months, compared with Scotland and Northern Ireland, where the average is 33 months, East Anglia, where it is 45 months, and the East Midlands, where it is 42 months.

Paul Bonett, secretary of Brighton and Hove Estate Agents' Association, said: "People who can stay at home while they save are in a far better position than those who have to stay in rented accommodation. The current situation is a double-edged sword for them, as they struggle to save while having to pay rent each month.

"The only relief on offer is really getting help from a relative or friend acting as a guarantor. There are also high multiple-income mortgages available but if interest rates go up, people can find themselves in a very difficult situation."

In Sussex, the first-time housing market is healthier in places like Hastings, Newhaven and Shoreham, Mr Bonett added, and there might be changes on the horizon in expensive Brighton and Hove.

He said: "I feel there might be an adjustment in Brighton because some buy-to-let landlords are struggling to get a return on their investment, which could lead to properties coming back on the market at a price first-time buyers can afford."

John Wriglesworth, an analyst at Hometrack, the independent property research and database company, said: "It is not surprising many potential buyers are feeling compelled to take out even larger 100 per cent mortgages or self-cert mortgages, which are typically much more expensive then standard ones. Some first-time buyers are even taking out unsecured loans in order to afford a deposit.

"In many cases, buyers are not properly assessing the true long-term costs of the higher-rate loans against the advantages of saving longer for a deposit which will enable them to obtain a much cheaper mortgage. The longer it takes you to save a deposit the more house prices will increase."

Thursday June 03, 2004