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One of the most keenly felt effects of the ill health of the global economy on the average person has been the dramatic slump in property prices.

For many households, the fall in prices witnessed since July 2007 has been a worrying trend that has big implications for their sense of financial security, and seeing around £38,000 knocked off the value of the average home in the UK in a little over a year and a half has forced many people to reconsider moving.

Meanwhile, those who bought properties at the height of the boom may have spent many restless nights worrying about the prospect of negative equity, which occurs when a property's market value falls below the amount that was originally paid for it. Add to the picture the high interest rates seen on fixed-rate mortgages not so many months ago and it becomes clear why the falls in property prices have been so worrying for homeowners.

Not All Doom and Gloom
Although few people would say that a property price crash is beneficial for the average consumer, one group that may have welcomed a moderate drop in prices is first time buyers, many of whom have struggled for years to get a foot on the property ladder as the initial deposit required to do so has soared.

For many first-time buyers, raising a deposit is the single biggest obstacle to getting the keys to a home of their own, as lenders will normally expect between five and ten per cent of the property value to be paid for upfront.

But while a drop in house prices would normally result in a smaller deposit, mortgage lenders have become cautious of taking on new debts and many first-time buyers have been told they need to offer a downpayment of as much as 25 per cent of the value of their desired home to be offered a mortgage deal.

Therefore, finding a way to build up a deposit is still likely to be a major concern for many first-time buyers and often people turn to their family or an inheritance to help with this.

Banks are recognising that many people struggle to raise a deposit on their own and a number of high street banks have unveiled new first-time buyer mortgage products that have been designed specifically to help people to get on to the property ladder.

As well as providing assistance in raising funds for a deposit, these first-time buyer accounts have also been launched to help young people who do not have a big enough 'credit footprint' for a bank to evaluate whether approving a loan is suitable, which is a common stumbling blocks for many first-time buyers.

Totting up the Other Costs
With organisations such as the Royal Institution of Chartered Surveyors announcing in June 2009 that the house prices seem to be levelling out, many may feel that now is an opportune time to enter the market for the first time, particularly as lenders become less reserved about extending credit.

However, it is important to carry out a full financial assessment before making a final decision, taking into account all the costs associated with buying a property.

The government urges people to take a good look at monthly earnings and outgoings to establish how much they can afford to put into a mortgage before moving any further along the road to homeownership.

Once this has been done, first-timers would be wise to tally up all the associated one-off costs that will need to be covered during the buying process.

Expenses such as surveyor's fees, stamp duty, conveyancer's, Land Registry and arrangement fees can mount up quickly and failing to account for them could cause major problems down the line.

Once these one-off costs have been factored in and accounted for, first-home buyers should then make sure they will be able to afford all the other ongoing costs associated with home ownership, such as buildings insurance, which lenders will usually require as a condition of the mortgage.

Mortgage protection cover, council tax and regular utility bills also need to be totted up to avoid being caught out down the line.

For those who feel confident that they can afford to make the jump into homeownership, it may be reassuring to remember that there is a wealth of advice available from the government's DirectGov website, as well as the Financial Services Authority, to help out with the process.

Meanwhile, for those who want help assessing their options ahead of making a move into the market, talking to a whole-of-market mortgage advisor may prove invaluable in making an informed decision that will ensure the best deal available.

To compare the latest mortgage rates from leading UK lenders click here.

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