Rising living costs are putting off first time buyers in the UK despite the fact that mortgage cost have fallen below 2003 levels, new research shows.

A new Ability to Buy Index from the Royal Bank of Scotland paints a mixed picture for first time buyers in Britain. While average mortgage payments have fallen to 2003 levels, it is now more difficult for first time buyers to get a foot on the housing ladder than during the 2009 recession. This contrasts with house price to earnings measures which suggest conditions have improved. But the rising cost of essentials during 2011 has outweighed the effect of falling house prices and rising incomes on the ability to buy. Ability to buy has deteriorated most on East of England, East Midlands and London property since 2009.

Low interest rates and squeezed discretionary income also mean that it will take a long time to save for a deposit. It also shows that while house price to income ratios have improved, ability to buy is worse than 2009, largely due to high inflation.

Kevin Hollinrake, the boss of Hunters estate agents – currently the largest independent estate agency franchise operator in the UK – is calling on the Government to delay reintroducing Stamp Duty for properties under £250,000.He said that first-time buyers would become virtually ‘extinct’ if the exemption is scrapped in March.

“First-time buyers are already at an all-time low, accounting for less than 10% of the market, and reintroducing Stamp Duty for properties below £250,000 will further reduce this diminishing market to almost extinction”, he commented.

Housing minister Grant Shapps has said that the Stamp Duty concession has proved “ineffective”.

Hollinrake conceded: “The property sector recognises that the concessions might not have had the desired effect in stimulating additional demand, but it did provide some help to first-time buyers who are already suffering from the reluctance of lenders to finance their first home. The reintroduction of Stamp Duty could force thousands of people to postpone their dream of buying their own home. There needs to be some support for those struggling to get on the property ladder.”