THE region's first-time buyers are being frozen out of the housing market by a massive rise in prices, according to a report today.

A nationwide survey says 95 per cent of houses in the North-East and 92 per cent in North Yorkshire are out of the price range of first-time buyers. The national average is 92 per cent.

It marks a large rise since 2002, when 54 per cent of homes in the North-East and 72 per cent in North Yorkshire were judged unaffordable.

Experts say the region's first-time buyers are facing a crisis as bad as in the South of England.

Martin Ellis, of mortgage lender Halifax, which carried out the survey, said: "The problems faced by buyers in the South over the past few years are now being replicated in the North."

In a worrying trend in the region, parents are re-mortgaging their homes to help children buy their first house.

Financial advisor Colin Henderson, who is based in Darlington, said: "This helps first-time buyers to get on the property ladder, but it costs their parents money to do so."

The annual review found the average price paid by first-time buyers nationally increased by 16 per cent last year, from £112,541 in 2003 to £131,024.

The price paid by first-time buyers in the North-East rose from £71,234 to £90,607. The 27 per cent rise was the biggest in the UK. In North Yorkshire, prices rose 18 per cent, from £161,855 to £190,325.

The knock-on effect has been that fewer first-time buyers are entering the market.

Nationally, an estimated 361,000 people bought their first house last year, the lowest annual total for 23 years.

In the North-East, the figure fell from 24,000 in 2002 to 18,000 last year, a drop of a quarter, while in Yorkshire, the number fell by 23 per cent.

It has also meant a large rise in the demand for shared equity properties -where buyers can part-purchase and part-rent a home from a housing association.

The money available for a first-time buyer in the North-East rose from 2.29 times their annual salary in 2002, to 3.71 last year. In Yorkshire, it went from 2.45 to 3.58.

This did not rise anywhere near as much as house prices.

Mr Ellis said the proportion of first-time buyers was likely to bounce back during the next few years as earnings growth overtakes price increases. He said: "There is no miracle overnight cure. People are going to have to be patient. There is some light at the end of the tunnel. We think 2004 will mark the peak of the problem."

The Halifax is calling on the Government to ease the burden by increasing the Stamp Duty threshold, which has been £60,000 since 1993.

Mr Ellis said: "Back then, there were not that many first-time buyers paying more than £60,000. Now, the vast majority are paying Stamp Duty."

People are also getting older before they buy their first home, with the average age now 36 in the North-East and 34 in North Yorkshire.

It was not all doom for the North-East. Peterlee, in County Durham, came out as the UK's tenth most affordable town, with the average home costing only 3.84 times the average salary.

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