House prices rise by £5 AN HOUR in London as the number of affordable homes for sale halves in a year
•House prices in London rise at an average rate of £5 an hour
•The number of affordable homes being built fails to keep up with demand
•Lack of space - particularly in the capital - is to blame, say experts
By Myra Butterworth For Mailonline
House prices are rising by as much as £5 an hour in some parts of Britain while the number of affordable homes has almost halved in a year, research reveals.
It is a fresh blow to first-time buyers who are already struggling to save for a deposit and meet the strict lending being imposed by banks and building societies.
The analysis of Land Registry figures suggest house prices are moving increasingly out of their reach.
In particular, values are rising at alarming rate of £5 an hour in London. The calculation by is based on prices in the capital rising by £43,795 during the past year, divided by 365 days.
A recent development for first-time buyers in London sold out within hours
At the same time, the number of homes for sale has dropped to its lowest level since 2011, according to credit agency Experian.
Affordable homes have been particularly badly affected. The number of homes for sale in Britain that cost £100,000 or less dropped 5 per cent during the three months between July and September this year to 33,667, compared to 31,920 for the same period a year earlier.
A stock photo of a trendy young couple (late 20's) with their baby looking in an estate agents window for property to let or rent. Image shot 06/2009. Exact date unknown.
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There has also been a steep decline in the number of affordable homes in London, where the number of homes for sale priced between £100,000 and £250,000 has dropped by 52 per cent during the same period to 1,693, down from 3,513 a year earlier.
Andy Wills, a data director at Experian, said: 'First-time and second-time buyers, particularly those with growing families are likely to be most affected by the shortage of affordable homes.'
Jonathan Stephens, managing director of Surrenden Invest, which carried out the analysis of the Land Registry data, said: 'There's a lack of physical space for new build properties and those that are being built cannot keep up with the rate at which they are being demanded.
'Nor is the issue likely to go away any time soon,' he added. 'In fact, with the huge growth in the UK's population, the situation is set to be exacerbated further still.'
Earlier this year, the Government announced the Starter Home initiative, pledging to build 200,000 new homes for first-time buyers by the year 2020.
The properties will be offered at a 20 per cent discount, which is being made possible as the Government is offering developers the chance to build on cheaper brownfield commercial land and waiving taxes.
The scheme will apply to buyers under the age of 40, who can register from the beginning of next year.
TOP TIPS TO ENSURE BUYERS MOVE INTO THE BEST POSSIBLE FINANCIAL POSITION
1. Know what you have to spend: Consider what funds you can draw together to form a deposit as this will help determine how much you face in terms of interest rates and lender fees.
2. Do you research: Use mortgage calculators and comparison websites to find the best mortgage deal and work out what you can afford to borrow and repay.
3. Scrutinise your spending: Since the Government introduced new mortgage affordability rules through the Mortgage Market Review, lenders are likely to look back through your accounts and see if you end each month with at least a small surplus.
4. Check your credit report: Ensure everything is accurate and up-to-date as any inaccuracies can cause delays when you do make an offer.
5. Room for improvement: If your credit report has areas for improvement, make a plan to get it into shape well before making your mortgage application.
6. Don't fall at the last hurdle: Once you've found a property and are ready to apply for a mortgage, take time to do a last-minute check of your finances.
The price of homes available under the scheme is likely to be capped at £450,000 in London and £250,000 outside.
However, experts have suggested there is 'sub-zero' chance of the Government's target for new homes under the scheme ever being reached.
Ray Boulger, of mortgage brokers John Charcol, told MailOnline: 'There are issues around this scheme that have still not been resolved – such as who will decide on the price of these properties.
'Even if they get started now on building these homes, they are never going to reach the deadline. There are simply too many things to work through, such as they are building these properties on brownfield sites, which mean the sites need contaminating.'