Only the wealthy, the well-paid and people with generous parents can afford to get onto the housing ladder, the Nationwide building society said today.
It warned the number of people able or willing to buy a home is rapidly shrinking.
Martin Gahbaeur, chief economist at the Nationwide, said: ‘A combination of restrictive credit conditions and uncertainty about the future economic outlook continues to limit the pool of buyers to those with relatively large financial resources.’
The lack of buyers triggered a fall in house prices this month, down 0.5 per cent to an average of £169,347.
Mr Gahbaeur predicts house prices will continue to wobble for the rest of the year, ‘osciallating between increases and declines, but probably more declines.’
One of the key reasons for the lack of buyers is that workers are worried about the crippling impact of the Government’s austerity plans.
Around 600,000 public sector workers are predicted to lose their jobs, with many facing a struggle to find a new job in a private sector where many bosses are not hiring.
Mr Gahbaeur said there is widespread concern ‘about the medium-term impact of fiscal austerity on personal finances.’
Ed Stansfield, chief property economist at the consultancy Capital Economics, said the drop in Nationwide’s house price index proves his prediction that prices are set to slump.
He said: ‘It adds to the growing body of evidence that the past year’s house price gains have now begun to go into reverse.’
The mortgage lending drought by banks and building societies is also fuelling the problem.
Official figures, published yesterday by the Bank of England, show the mortgage lending downturn is getting worse.
Last month, just 47,643 loans were handed out to people wanting to buy a property, which is 1,800 lower than the previous month, and 3,000 lower than in June last year.
By comparison, more than 100,000 loans were handed out every month in the two years before the credit crunch began in August 2007.
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