Marginal improvement in FTBs&’039 circumstances

The ability for first-time buyers to buy improved by just 1% in 2011, despite falling house prices, RBS has reported.

The situation for first-time buyers improved most in Northern Ireland and deteriorated most in the east of England.

Even though the average UK first-time buyer’s earnings increased, the big rise in living costs prevented further improvements in the index, RBS said.

Lower house prices mean the average mortgage payment faced by a first-time buyer household fell by £20 per month in 2011, to 51% of discretionary income, from 53% in 2010.

The average UK first-time buyer household will have to save for 35 months from Q4 2011 to get a 10% deposit. This is one month less than they would have expected to save for in Q3. But it will still take 45 months for first-time buyers in London.

The end of the stamp duty holiday will raise costs for first-time buyer, but only in the most stretched parts of the UK.

Fionnuala Earley, RBS Group UK consumer economist, said: “The RBS Ability to Buy Index improved by 1% in 2011 to its best level since 2009. But the size of improvement was hindered by higher living costs. More simplistic measures of affordability suggest a much bigger improvement than this. But by including living costs we get a much more accurate picture of the real ability to buy. Without the surge in prices of essentials