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The review, launched by the Building Societies' Association and Chartered Institute of Housing, found average mortgage costs had risen to 22 per cent of average household earnings by the end of 2007.

While recent falls in prices and interest rate changes may have reduced this slightly, they were still well above the 12 per cent average back in 1994, the review found.

The highest average mortgage costs are in London at 26.8 per cent of average household earnings followed by Northern Ireland at 26.5 per cent, while the lowest are in Scotland at 15.2 per cent and the North East at 17.4 per cent.

However, even the lowest are well above the 1994 figure, the lowest the review has recorded, demonstrating the scale of the affordability problems that are now found throughout the UK. In the buy-to-let sector, landlords are going to have their finances stretched as property prices fall, the review claimed. It said with the increased supply of privately rented accommodation coming onto the market in the last few years, rents had remained stable, meaning that landlords have had to look for capital growth to realise profits from investments. However with property prices now falling, landlords find themselves in a challenging market.

Neil Johnson, public relations and policy manager for the BSA, said while the review found promising medium-term prospects for the sector, it would be interesting to see if the short-term sees, as forecast, landlords leaving the market or choosing to ride out the storm.

He said: "Although the headlines are dominated by talk of falling prices, with the review finding that the long-term supply and demand problems remain, it looks like the affordability problems will not have left the market by the time that buyers return."