Mortgage lending is "tighter now than it was six months ago", an economic consultancy has warned.
The prospect of buying a house will also become more daunting if, as is widely expected, the Bank of England "will start raising interest rates" this year, putting further strain on the cost of living, the consultancy warned.
The latest housing affordability index, published by Lombard Street Research
(LSR) in conjunction with The Daily
Telegraph, shows house prices are at their most undervalued level since
the mid-1990s.
In the third quarter of 2010, the index reached 116.7, up 0.2 from the previous quarter, on a scale where 100 represents average affordability since the 1960s.
The index peaked at 118.2 in the second quarter of 2009, but the latest figures are still at a far higher level than most of the past two decades.
But bank lending on home loans is becoming increasingly "squeezed" since the financial crisis, LSR said, meaning very few first-time buyers will be able to take advantage of the so-called housing affordability.
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