Tighter lending conditions due to the credit crunch mean nearly half of all young first-time buyers now receive help getting on to the property ladder, research has shown.

The percentage of first-time buyers under 30 receiving help with a deposit during the second quarter of the year rose from 38% in 2006 to 50% in 2008, according to the Council of Mortgage Lenders (CML).

The group said first-time buyers were failing to benefit from house-price falls because lenders were tightening their lending criteria and demanding increasingly large deposits.

As a result, despite recent steep falls in the cost of property, many people are finding it as difficult as ever to buy their first home.

During the second quarter of the year, the typical first-time buyer put down a £19,000 deposit, compared with a £14,500 one during the same three months of 2007.

The CML said in a report: "The effect of lenders cutting back on loan to value ratios and income multiples means that the number of unassisted buyers is shrinking further, and first-time buyers, a key source of liquidity in the property market, are becoming more reliant than ever on help from their parents."

The group said the average assisted first-time buyer put down a £35,000 deposit during the second quarter, compared with one of £7,500 for buyers who did not receive any help.

Unsurprisingly, this enabled people who had parental support to typically borrow just 75% of their property's value and qualify for a more competitive mortgage rate of 5.79%, compared with unassisted buyers who had to borrow nearly 95% of their home's value, increasing the mortgage rate they paid to 6.12%.

The contrast was starkest in London, where the typical assisted buyer had a £67,000 deposit but an average salary of £42,000, while those who did not receive help put down just £19,000 but were paid £57,000 a year on average.

The CML said the market still appeared to be "some way off" the size of correction in house prices that would be needed to enable most first-time buyers to buy without help.

But it warned that with house prices continuing to fall, young buyers may get less help from their parents, who would themselves have less equity in their property that they could draw on.

Copyright © PA Business 2008