First-time buyers would be paying £77,000 less to get on the property ladder if house price inflation had kept pace with wage increases in recent decades, according to analysis by Shelter.
Across England, the price of a starter home has increased by around 48 times since 1969, from £4,136 to £198,039 typically, a report by the charity said.
This has massively outstripped the growth in first-time buyer households' incomes over the period, which have typically increased 29 times from £1,624 in 1969 to £47,574 in 2013.
If house prices had increased at the same rate as incomes, the average first-time buyer would be paying £76,873 or around 30% to 40% less than they actually are for a property, according to the findings.
This means that instead of having a price tag of £198,039, the average starter home would cost £121,166.
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The gap between what people are actually paying to get on the property ladder and what they would have been if house prices had increased in line with incomes ranges from £34,178 in the North East to £139,203 in London, the report, titled Housing Affordability for First Time Buyers, found.
The English Housing Survey also showed that people aged between 25 and 34 were now more likely to be renting privately than buying their own home.
The proportion of young people in this age group who were privately renting had more than doubled since 2003/04, with almost half (48%) of all households where people were aged 25 to 34 renting privately in 2013/14, according to the data.
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Over the same 10 years, owner-occupation levels in this age group had fallen from 59% to 36%.
A lack of homes for buyers to choose from was often cited as a reason for house prices generally continuing to push upwards.
The government has launched mortgage support schemes such as Help to Buy, which assists people with a 5% deposit to move onto or up the housing ladder.
Earlier this week, Prime Minister David Cameron pledged to double to 200,000 the number of cut-price starter homes to be built under a Conservative scheme, as he set out his ambition to make home ownership "the privilege of the many, not the preserve of a few".
The scheme targets under-40s priced out of the first-home market by offering developers the chance to build on cheaper brownfield commercial land and waiving taxes, in return for a 20% reduction in the normal sale price.
The scheme was first announced with a target of 100,000 homes at the Conservative Party conference in September.
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But Shelter's chief executive, Campbell Robb, said: "When wages and house prices are so out of sync that first-time buyers are having to pay tens of thousands of pounds more for a foot on the ladder, it's a clear sign that our housing market is out of control ...
"Politicians of all parties need to stop announcing piecemeal schemes and commit to ending the housing shortage once and for all.
"We need a big bold plan that will fix our broken house-building market for the long-term."
Housing Minister Brandon Lewis said: "Housebuilding and helping first-time buyers are key parts of our long-term economic plan - we've got the country building again with 700,000 homes delivered since the end of 2009.
"We're clear that anyone who works hard and wants to get on the property ladder should get the help they need to do so. That's why we've introduced Help to Buy, enabling people to become homeowners with a fraction of the deposit they would normally require, and have introduced a new Starter Homes programme to offer a 20% discount on new-build homes for young first-time buyers. The number of first-time buyers has reached a seven-year high.
"We have delivered nearly 217,000 new affordable homes since 2010, and we're levering in £19.5 billion of public and private investment in affordable housing up to this year. Council house building is now at a 23-year high.
"On top of this, a further £38 billion public and private investment will be delivered in the next Parliament to provide a further 275,000 new affordable homes, taking house building to its highest level for two decades.
"We have also taken steps to tackle the deficit we inherited and helped keep interest rates at a record low, keeping mortgages more affordable."
Here is the average price being paid for a house by a first-time buyer in each region according to Shelter, followed by the amount that it said house prices would have been if they had risen in line with incomes and the difference in cash and percentage terms:
- North East, £113,606, £79,428, £34,178, 30.1%
- North West, £127,570, £85,495, £42,075, 33.0%
- Yorkshire and the Humber, £125,320, £77,927, £47,393, 37.8%
- East Midlands, £129,035, £83,698, £45,337, 35.1%
- West Midlands, £137,470, £93,766, £43,704, 31.8%
- East, £159,052, £98,959, £60,093, 37.8%
- London, £333,057, £193,854, £139,203, 41.8%
- South East, £210,777, £136,524, £74,253, 35.2%
- South West, £168,578, £105,891, £62,687, 37.2%
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