Government statistics indicated a drop of 83,000 in owner-occupier households, with a corresponding rise of 107,000 in the number renting, according to Halifax Bank of Scotland (HBOS).

It was the second year in a row that the number of owner-occupiers has fallen, while longer-term trends indicated that London has been particularly badly affected by the trend, which Halifax blames on declining affordability. The number of owner-occupier households in the capital dropped by 111,000 during the period between 2001 and 2006.

Martin Ellis, Halifax chief economist, said: “The figures for owner-occupancy clearly demonstrated that these affordability issues are most pronounced amongst younger people and in southern parts of England.”

The figures come a day after Sainsburys Bank revealed that the value of buy-to-let properties in the UK grew by £69.5bn in the year to November 2007.