Record rises in energy prices and steep council tax increases are making life harder for first-time buyers, says a new report...
Finding a deposit is tough enough, and stamp duty always comes as a bit of a nasty surprise, but now first-time buyers are facing additional costs due to rising utility bills and higher council taxes.
According to Yorkshire Bank research, gas and electricity prices are now at such a high level that one in three (33 per cent) first-time buyers would avoid buying a property that lacked the basics such as double glazing and cavity wall insulation.
They are, says Gary Lumby, Yorkshire Bank's head of retail, conscious that utility bills are on the rise and know that this will make owning their first home more expensive:
"With the average annual domestic energy bill now close to £1,000, it is clear the energy costs and efficiency of a home are becoming as big an issue for first-time buyers as raising money for a deposit or paying stamp duty.
"The problem is that, unlike a deposit or stamp duty - which are one-off payments - energy costs are ongoing. Consequently, energy efficiency and the size of a home's energy bill is now essential information for those looking around potential homes."
Council Tax As well as having to factor higher energy prices into their already tight budgets, first-time buyers are also bracing themselves for this spring's rise in council taxes.
Yorkshire Bank found almost one in four (23 per cent) first-time buyers were putting off plans to buy until local councils announced their charges for the year ahead.
Gary Lumby said: "Higher council tax is a concern for many buyers, not just those looking to buy their first home. The general cost of running a home is set to be more expensive in 2006, with combined council tax and utility bulls estimated to rise by an average of 111 per cent.
"The problem for buyers is that average earnings are only rising at 3.6 per cent. As a result, first-time buyers should consider buying sooner rather than later - as affordability may become an even bigger challenge.
"Although it is clearly harder for people to get onto the property ladder, stable interest rates are helping. And should the Bank of England reduce rates in the next few months as expected, then it will be cheaper for buyers to borrow."
Where household bills are increasing:
Water bills: 2005: £279. 2006: £295. (+5.7%)Energy bills: 2005: £795. 2006:£971 (+22.1%).Council Tax (Band D): 2005: £1,197. 2006: £1,250 (4.4%)Overall cost: 2005: £2,271. 2006: £2,516 (+10.8%).