ESTATE agents in York say a shortage of first-time buyers is causing the cost of renting a property to shoot up.

Kevin Hollinrake, of Hunters Estate Agents, said first-time buyers were finding it increasingly difficult to get on the property ladder because of high deposits and more stringent credit requirements by lenders.

The result, he said, was more people choosing to rent, which had pushed up monthly rent prices by between ten and 15 per cent in just 12 months – meaning the average monthly rental price in York had risen from £550 to £600.

Mr Hollinrake said: “Five years ago you didn’t need a deposit at all. The building society would even let you borrow the legal fees, the stamp duty and money to buy furniture for the house.

“Now you are going to need a minimum ten per cent deposit, so about £15,000 for a £150,000 house.”

He said first-time buyers traditionally account for about 25 to 30 per cent of purchases in the market – but that figure was down to about 15 per cent.

He said although this created a knock-on effect to the rest of the market, the situation was far from all gloom and doom.

He said: “We have got investors coming back into the market who are buying properties at the bottom of the market because they can get such a good rate of return.

“It was always going to be a difficult year because of the spending cuts, but the market has kept going much better than we thought it would. I don’t think it will stagnate.”

Edward Waterson, a partner in the York office of Carter Jonas and regional spokesman for the Royal Institution of Chartered Surveyors, also painted a mixed picture.

He said York city centre was one of the “brightest hotspots in the country” due to increasing numbers of people choosing to move into cities.

“There is a trend to move into cities, which gets stronger every time we have a cold winter, and in central York prices are probably as high as they were three years ago,” he said.

Mr Waterson said buy-to-let was also becoming increasingly attractive because of low interest rates for savers combined with rising rents.

But he said the housing market was still very fragile and estate agents were expecting a tough 2011.

He said: “Normally between seven and eight per cent of the housing stock is on the market at any one time, but that figure is currently four per cent.

“Estate agents make their money by selling properties, so if there’s only half the amount of stock on the market, that is making life hard for estate agents.

“We would like to introduce an air or realism to both vendors and purchasers, because we have lost a number of sales recently where both parties simply refused to budge on price. If both would be a little more realistic that would help everybody.”