A third of those who have not yet bought a property believe that they will never be able to afford to do so, according to a new report.

The newly-formed National Housing and Planning Advice Unit (NHPAU) has issued a stark warning to the government that existing problems in the UK housing market are only going to worsen.

"Housing affordability has reached a critical point," said Stephen Nickell, former member of the Monetary Policy Committee and chairman of the NHPAU.

"First-time buyers have seen a big rise in the deposit needed to buy a home and the amount of their income spent on mortgages. Demand for housing is growing and unless action is taken, pressure on the market will only get worse," he added.

Seven years ago, the cheapest 25 per cent of houses were four times more costly than the annual earnings of the poorest 25 per cent of people. At present, these houses are seven times the cost of annual earnings. By 2026, homebuyers in this category can expect house prices that are ten times their annual earnings, the report warns.

The research suggests that homebuyers have been financially crippled by escalating living costs, strong house price inflation and higher interest rates.

Fundamentally, however, buyers are struggling because there is a major imbalance between supply and demand. While affordability is currently poor, demand is strong enough to ensure that prices are continuing to rise.

Speaking to the Guardian, Mr Nickell also ruled out the possibility of a property market crash.

"If interest rates went to six per cent it would be fairly challenging for the housing market but I don't want to overstate that. It would not cause any kind of crash, for that you would need lots of people to lose their jobs," he said.

A fifth of prospective homebuyers believe it will take them at least five years to take their tentative first steps on the property ladder. This means that the average age of a first-time buyer is likely to rise and experts are concerned that there will be serious social, as well as economic, repercussions.

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