It's a big first step

IT'S not easy for a young couple in York to get their foot on the first rung of the property ladder.

Property prices may have levelled off during the past few months, but there is no sign of them coming down. And with the average price of a house in York now £170,000, many young people are finding themselves priced out of the market.

The cheapest home on the books at Pink, the first time buyer's arm of estate agents Hudson Moody, is a city studio apartment at £89,950. It's really a one-person apartment. "And for one person that's a lot of money," says Pink office manager Ruth Hone. "You've got to be earning £20,000 a year to be able to afford that and have a deposit."

Many couples ask Ruth for properties of £100,000 or less. And with even a two-bed terrace in the Leeman Road or Burton Stone Lane area selling for £120,000, she knows she's probably not going to be able to help.

"It does get you down," she says. "These are ordinary, hard-working couples, looking to start a family or just settle down together in their first property. They just want to get out of rented accommodation. And they can't. Many people give up."

So what about all these new flats springing up all over the city? Many are being bought to rent. So there are plenty of good rental properties, but for those looking to buy their first home it is not easy.

Kevin Hollinrake, of Hunters estate agents, recognises the problem: "There is not enough supply at the bottom end of the market to meet demand," he says.

Many young couples face difficulty getting a mortgage big enough to allow them to buy at today's inflated prices.

As a rule, a lender will lend up to three times a couple's combined income. So a young couple earning £30,000 between them will only be able to borrow £90,000 - even at full stretch.

There may be some sops to home-buyers in Wednesday's budget, possibly in the form of raising the threshold at which Stamp Duty becomes payable from £60,000 to £100,000. But because there are few homes in York on the market for less than £100,000, that won't help anyone much here, says Richard Mowbray of the Mortgage Advice Service in Skeldergate.

"You can see it all getting away from you," says Dan Adams, a young mental health worker who has eventually managed to buy a property with his girlfriend, Michelle McCormack. "And you know the longer you leave it, the more prices creep up."

As a project warden working with people with mental health problems, Dan, 27, earns about £19,000 a year. Michelle, who has just got a job in a bank, was earning about £15,000. They tried for a mortgage of £100,000 - and couldn't get one.

The irony is they were paying more in rent than they would have been if they had a mortgage, Dan says. It's a common dilemma.

The good news is that with house prices having bottomed out, things should get better. The bad news is it won't happen overnight, according to Richard Mowbray.

"It has to improve in the future, otherwise the market is not sustainable," says Richard.

"But while some people are of the opinion that there is going to be a sudden dramatic price adjustment, I think the housing market will slow, but not reverse, and we will see a gradual return back to affordability."

So if you are a young couple looking to settle down and buy now, what can you do?

It helps if one or both have parents who can afford to chip in with a decent deposit.

Others look to buy somewhere cheaper out of York. The problem is that you may have to go a long way, says Richard - possibly as far as the east coast or even Middlesbrough.

There is another option, however, provided you meet the right criteria. Eventually, Dan and Michelle were able to buy a new flat in York with the help of a city council affordable home ownership scheme. They paid 50 per cent of the £135,000 market value of their new two-bed ground floor flat in Fulford Place - so they only had to find £67,500. If and when they sell the flat, they will receive half of whatever it sells for. It is a lovely new apartment - and their £350-a-month mortgage is far less than they were paying in rent.

Sally Mowbray and her boyfriend Peter Marshall also managed to buy a new two-bed flat near Walmgate Bar under the same 50 per cent scheme. Normally, there is no way they could afforded it, says Sally, 23. Now they have been able to decorate and add value to the property. And their money isn't just being frittered away in rent, it is paying off their mortgage.

:: Affordable home ownership

CITY of York Council, which insists all large new developments must contain at least 25 per cent of affordable housing, runs two affordable ownership schemes in York:

Discount sale, where you pay a percentage of the market value of your home, and get that same percentage back when you sell. You pay mortgage only, and do not pay rent, but cannot subsequently increase your share of the house.

Shared ownership. You part-rent and part-buy a property. After a certain period of time, you are allowed to increase your share in the home.

The number of properties available is limited - just over 40 homes were sold on an affordable basis in York last year - and there are strict eligibility criteria. York residents are given a priority.

No properties are currently available, but more are expected to be completed soon. For either scheme, you will need to register by filling in an application form. To find out more, contact the city council's housing development team on 01904 613161 ext 4199.

The Joseph Rowntree Housing Trust runs the Government's Homebuy scheme in York. Those who are eligible - usually housing association or council tenants or people on the York housing waiting list - can receive a loan for 25 per cent of the value of a property they wish to buy. This can be repaid when you sell.

To find out more contact the trust on 01904 735000.

Updated: 09:44 Tuesday, March 15, 2005