The West Midlands retail economy is set to suffer as young professionals become more frugal as part of their struggle to get on to the property ladder, it has been claimed.

The warning came as official figures revealed more young adults are living with their parents and for longer as house prices soar, and the number of first-time buyers fell to a near two-year low.

The average price of a house in the West Midlands rose 256 per cent in the last decade, from #67,508 in 1997 to #173,121 this year, according to recent figures from the Halifax. And today the Office for National Statistics said the average income of first-time buyers in the decade to 2005 increased only by 92 per cent, to #35,900.

According to the ONS report, last year about six in ten men and four in ten women aged 20 to 24 in England still lived with their parents. That figure was up from about half of men and 30 per cent of women in 1991.

Richard Franklin, spokesman for the RICS in the West Midlands and director at the Savills property company, said: "It's not a case of 'the bank of mum and dad' so much as the 'hotel of mum and dad' now.

"It's because of escalating house prices that means buyers are finding it difficult to build up the deposit needed to buy a house. A standard deposit of #10,000 wouldn't even get you five per cent of many properties, and that makes it difficult for first-time buyers."

Many first-time buyers were looking to taking unfavourable mortgages, stretching over 40 years or covering the full value of a property, to avoid the stigma of living with parents.

He warned that the cost of getting on the first step of the property ladder would have a "restrictive impact" on the disposable income of many young professionals, and this would impact on the region's economy.

"If you are at your parents' house or renting a property and trying to save for the deposit on a house, it's going to mean you will have to keep a very close eye on what you are spending.

"It does restrict your liberty, because buying the latest CD or buying clothes or going down to the pub aren't essential."

The ONS Social Trends report published today says first-time buyers are paying larger deposits to get on the property ladder as the gap between house prices and their incomes widens.

In 1995, first-time buyers in the UK paid an average #4,800 deposit – nearly ten per cent of the average house price for that year. A decade later the average deposit paid by first-time buyers rose to #27,300 – about 19 per cent of the average price.

Meanwhile, the Council of Mortgage Lenders said the number of first-time buyers entering the property market fell to a near two-year low nationally in February amid growing mortgage costs and spiralling house prices.

CML said the number of home loans taken out by maiden buyers during the month dropped to 25,600, down from 26,400 the month before.

Mr Franklin said he believed more first-time buyers would be looking to share the cost of equity in the future by sharing properties, while Nicholas Leeming, director of property website propertyfinder.com spelled out the difficulties for first-time buyers.

He said: "A typical first time buyer is now facing mortgage payments #120 per month higher than a year ago (#1,400 per year), following three rate hikes and higher house prices.

"On top of that, the typical first time buyer has now been dragged back into the Chancellor’s stamp duty net, so he has to find #1,250 to pay the tax bill too.

"Buying a home today will therefore cost today’s first time buyer #2,625 more in the first year than a similar buyer last Easter."