Proof that Britain has a housing crisis for first-time buyers and modest income key workers is underlined by the latest quarterly market survey from the country’s largest network of more than 740 independent estate agents.

According to respondents of the latest Home Sale Network property survey, sales to first-time buyers dipped to less than 14% of transactions during the second quarter of 2004. The equivalent figure for the same period last year was almost 18%.

For the latest month (June), sales to first-time buyers had further declined to just over 12%.

Average prices of properties sold by Home Sale Network members during the latest quarter, in categories normally targeted by first-time buyers, have increased by about 15% nationally over the same quarter last year. One bedroom flats have risen from £76,000 to more than £85,000, with two bedroom terraced houses increasing from £102,500 to £120,500.

According to Richard Tucker, managing director of Home Sale Network: “The past two months have seen a marked change in the housing market. The price increases and shortage of property, which characterised a booming first quarter, have calmed."

“June saw a marked slowdown in market activity, in response to publicity surrounding Bank of England Governor, Mervyn King’s, warnings about house prices, interest rate rises, and the national focus on the European football championships. However, our members have been reporting a resurgence in July”, said Mr Tucker.

In line with other market reports, the Home Sale Network survey for the second quarter of 2004 confirms that the market is calming. Almost half of respondents (45%) reported a decline in the number of buyer enquiries, compared to an increase reported by more than 70% during the first quarter.

Supply and demand figures from Home Sale Network members reinforce this market picture.

In the second quarter of 2004, 44% of member respondents said there was more demand than supply of homes for sale, compared to the boom we experienced in the first three months of 2004, when 65% of network estate agents recorded an excess of demand over supply. For the month of June, that figure dropped back to just 28%.

“It is interesting to see the impact that publicity surrounding Mervyn King’s comments had in June, combined with the effect of interest rate rises and the diversion created by the Euro 2004”, said Richard Tucker.

“Although market realities do seem to be re-establishing themselves, we are seeing signs that the market is slowing and will continue to do so, following the buoyancy of the start of the year. However, this does not spell disaster for the housing market."

“The fact remains that supply – especially new build, which is at a post war low – lags behind the growth in demand. Interest rates, unemployment, and inflation are all at historically low levels. The combined result of this cocktail is a more even, calmer market,” said Mr Tucker.

Other national findings of the latest Home Sale Network quarterly survey include:

• The biggest demand is for homes in the price bracket £100,000 to £150,000.
• Sale prices are achieving 95.99% of asking prices.
• Average time from marketing to final offer is now 6.2 weeks.
• Strongest buyer interest is in 3 bedroom semi-detached houses.