The average mortgage payments faced by a first-time buyer household fell by £20 a month.
Improvements were also due to a 1.4% fall in first-time buyer house prices and a 1.1% increase in gross earnings during the year.
However, greater improvements in first-time buyers’ ability to buy were prevented by a surge in living costs.
Consumer prices increased by 4% in 2011 compared with 2010 but there were greater price rises for essentials. Food prices rose by 5%, utility prices by 6% and transport costs by 8%. Spending on transport alone took up one sixth of first-time buyers’ discretionary income.
Despite an increase in earnings in 2011, these higher prices of essentials meant discretionary income fell by 0.4%.
Gross earnings for the average first-time buyer household averaged £24,905 in 2011 but after tax, National Insurance and spending on essentials, discretionary income was just £13,205 - 69% of gross earnings.
The price of an average first-time buyer house fell by 1.4% in 2011 and is expected to continue to fall in 2012.
Lower prices were good news for first-time buyers because they could borrow less and save for a smaller deposit.
Mortgage payments faced by an average first-time buyer household in 2011 fell by £20 per month. As a result mortgage payments only took up 51% of discretionary income in 2011 compared with 53% in 2010.
Graham Felstead, head of intermediary channel at NatWest Intermediary Solutions, said: “The -results of the RBS Ability to Buy Index show that on one side of the coin - falling house prices and wage increases - the situation has improved for first-time buyers, whilst on the other side of the coin - inflationary pressures on discretionary income - conditions have deteriorated.
“However the bottom line is that the ability to buy did improve in 2011, albeit by a small amount, and some of the hardest hit regions in the UK have seen a significant uplift in conditions.
“With inflation expected to continue its downward trend, the future could start to look better for first-time buyers.”
