House price affordability has started falling for the first time since the slump in property values, meaning that prices are now once again moving out of reach of the average buyer.
"The affordability of UK property market has been falling since the middle of 2009, according to exclusive new research produced for The Sunday Telegraph by Lombard Street Research (LSR).
The survey shows that house prices have once again started outpacing the increase in the average family's disposable income, meaning that the best opportunities for good value property have passed.
The findings would have seemed highly unlikely at the beginning of 2009, when house prices were tumbling and past experience suggested that it would take some years for the property market to find its feet again. However, the combination of record low interest rates and a series of Government programmes to support homeowners have helped prices to turn around far quicker than expected.
In a study to be published on Monday, the Centre for Economics and Business Research is expected to predict that house price growth will continue next year – albeit at a slower pace than in 2009, with property prices finishing the year between 2pc and 4pc higher than today. It will also predict that by the end of 2012, house prices will be around 15pc higher than today.
LSR's housing affordability index, in which 100 points represents the average affordability level since the early 1960s and a lower figure means prices are more overvalued, dropped from 118.2 points to 117.9 in the third quarter of the year.
The fall is the first since the beginning of the housing correction in mid-2007, at which point the affordability index was at a nadir of 82.7.
According to experts, this suggests that the high point for affordability has now been and gone. The peak, in the second quarter of 2009, was not far shy of the 118.9 reached after the early 1990s property crash.
LSR economist Melissa Kidd said: "Affordability has now peaked. The major effect driving that is that house prices have risen quite quickly. Disposable income is up as well, while mortgage rates are low."
LSR's affordability index is different from other attempts to gauge the value of housing in comparison to people's ability to pay for it.
Whereas others simply compare mortgage costs or gross incomes with prices, LSR's index compares prices with definitive household disposable income and the monthly mortgage burden. The comparison is key to working out whether homes are of an accessible price or not, since fast-rising incomes can make property more affordable.
Nationwide and Halifax will next month confirm that house prices rose during 2009, turning around major falls to end the year higher than they began it.
Over the course of the entire housing correction, prices dropped by around a quarter. However, these overall figures mask significant variation from region to region.
In particular, the areas which have prospered most in the past year are those tied to occupations which have benefited from low interest rates and Government bail-outs – in particular the City.
As a result, prices in the more upmarket areas in London and the south east of England have risen far faster than most others this year although they suffered some of the sharpest falls the previous year.
Ms Kidd said: "We've had this huge boost to disposable income from low rates, but there's not much to see what could drive prices much higher next year. We expect low single digits rises in prices in 2010.
"The problem is that it is difficult, because of the credit crunch, to get access to really cheap mortgages. Plus, there will be more stock coming on to the market which should reduce the pace of house price increases.
"That said, we are unlikely to see the scale of house price declines we did recently for some time."
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