First-time buyers are rapidly vanishing from the property market, with numbers falling by a fifth in the past six months, according to new figures.

The number of people describing themselves as first-time homeowners fell between March and September, from 20 per cent of the UK population to 16 per cent, research by money-supermarket.com, the price comparison site, found.

Separate figures from the Royal Institution of Chartered Surveyors (RICS) confirmed that demand among first-time buyers is dampening.

The number of new buyer inquiries fell at the fastest rate since March 2003 in September and for the tenth month in a row, while house prices fell for the second successive month, according to a RICS report.

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First-time buyers are deserting property market

According to figures, first-time buyers are leaving the property market, with numbers falling by a fifth in the past six months

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Economists said that the decline was evidence that the impact of higher interest rates, high house prices and only modest growth in disposable incomes was beginning to bite at the bottom end of the property ladder, and that demand was likely to worsen.

The Northern Rock crisis, turmoil in financial markets and growing speculation about a “sharp” correction in the housing market were blamed for the fall in demand.

Howard Archer, chief economist at Global Insight, said: “Increased affordability pressures . . . are taking an increasing toll on the housing market. These growing affordability pressures are making it increasingly difficult for first-time buyers to get into the housing market.”

First-time buyers are expected to suffer a further setback as thousands of buy-to-let investors and second homeowners flood the property market to take advantage of a new low rate of tax on assets, announced in this week’s Pre-Budget Report.

The introduction of a flat 18 per cent rate of capital gains tax is likely to encourage investment in one and two-bedroom homes, pushing up prices and squeezing out first-time buyers, according to property experts.

The Government was criticised for not doing more to help people on to Typical first-time buyer properties worth between £125,000 and £250,000 attract stamp duty of 1 per cent, adding thousands to the cost of buying a home.

The proportion of first-time buyers’ salaries being spent on repayments is now at a near 16-year high of 20 per cent, according to the Council of Mortgage Lenders.

Mortgage lenders have been restricting the amount first-time buyers can borrow over recent weeks to reduce risk.

The moneysupermarket.com research suggests that fewer first-time homeowners are climbing on to the ladder, while more are moving on to a second mortgage.

Louise Cuming, head of mortgages at moneysupermarket.com, said: “First-time buyers are the life blood of the housing market and provide essential liquidity, so the fact that this segment of the market is getting smaller is worrying for the economy as a whole.”