House prices in Britain have fallen to their most affordable level in over five years, benefiting people hoping to buy a home for the first time, according to HBOS PLC bank.

HBOS said the ratio of house prices to average earnings dropped to 4.56 in November, down from a peak of 5.84 in July of last year - making house prices more affordable for the average Briton than they have been since July 2003. Over the last 18 months, the number of areas in Britain where the typical property is affordable for the average first-time buyer has more than tripled, HBOS added.

Martin Ellis, chief economist at HBOS, said: “There has been a marked improvement in housing affordability in many parts of the UK. First-time buyers, in particular, are benefiting.”

The Council of Mortgage Lenders (CML) reported earlier in December that the number of loans granted to first-time buyers rose 15% in October compared to September, although that was in a depressed market in which the total value of new mortgages was down -57% from a year earlier.

Despite falling prices, HBOS found that there were still no areas in Greater London that were affordable for first-time buyers. It also said that the 4.56 ratio was still higher than the house prices to earnings ratio that has been typical over the last 20 years, during which time it has averaged 4.0.

The falls in 2008 erased some of the rapid gains house prices made in the previous decade. In the 10 years through 2007, average house prices in Britain tripled, according to HBOS.

Housing researchers are widely predicting that the housing market will deteriorate further in 2009 as Britain’s economic slowdown accelerates. Hometrack, the Royal Institution of Chartered Surveyors (RICS) and Rightmove have all forecast that house prices will drop by 10% this year.