Anybody looking for their first home could usually be sure that a dreary Phones4u advert would not point the way to their dream location. A recent advert for the mobile phone company shows aggressive seagulls in ghastly grey skies, a panic-stricken public and a strange staring local named Scary Mary. This is Newhaven, the latest first-time buyer hotspot.

The credit crunch, as played out in banks, building societies and call centres across the land, has left no group stranded further from the shore than first-time buyers. Investors - also scrabbling for funds - at least have the luxury of diverting their excess cash to, say, shares, ingots or ranches in Argentina. But first-time buyers, impatient to take a sensible step towards financial security yet caught by sharply rising rents just as they are urged to stockpile more cash, have been left high and dry.

House prices, though sliding, stubbornly refuse to come within reach of mortal salaries. Yet lenders have suddenly dusted off ancient income multiples and deposit requirements, dismissing first-time buyers as too risky, despite their obvious motivation. The latest National Association of Estate Agents survey shows that first-time buyers represent only 7.7 per cent of all purchasers, down from 14.5 per cent in January (and from levels as high as 50 per cent in the 1980s). First-timers have, one agent says, gone into what looks to be a long “hibernation”. Others would prefer the term “near extinction”.

There has been much chat from the Government about its elaborate affordable housing schemes; in fact, we seem to hear more about them the higher the problems pile up elsewhere in the housing market. But these mixed-blessing fixes are only scratching the surface of the affordability crisis. Those who no longer want to delay their debut in the housing market must come to terms with the new realism necessary for first-time buyers.

No one is suffering as much as first-time buyers

Lenders are getting more picky, yet property prices are refusing to fall far enough, fast enough

For many, that will mean places that look less like Brighton and more like its neglected neighbour Newhaven. The days of first-timers over-extending to buy tiny, second-rate homes in prestigious locations and selling them a few years later for a fat profit are over, as such bold gambles are unlikely to be made good by rising house prices any time soon. First-time buyers are better off taking a long-term view and hunting out cheaper locations with hidden potential: in Newhaven, buyers can find terraced houses for £194,658, a good £70,000 cheaper than Brighton. In Swanage, just five miles from the millionaire's playground of Sandbanks, cash-strapped buyers can find apartments for £130,000. Crucially, these are homes in which buyers can stay put if they need to, for manageable sums. Such undervalued gems are hard to find, but you can catch glimpses - in Bricks and Mortar, from train windows or even, it seems, in the odd unflattering television advert.

UNLIKELY FRIENDS

One group proving unexpectedly helpful to first-time buyers is the big housebuilders. With few investors willing to relieve them of unsold stock, developers are now conjuring up offers and incentives to woo first-time buyers. These deals are some of the best around, but buyers should proceed with caution: too often they are paying for these extras in inflated prices. Take a lead from the experienced players who are ruthlessly pursuing deals in the auction room.

But that's not to say we shouldn't applaud developers such as REAL, which is offering studios in a rather nice development in Harlesden, North London, at £149,950. REAL could pull in buyers from across London with these prices but is restricting itself to helping owner-occupiers from the low-income local area.

It's certainly good to be able to report these pleasant things about housebuilders, after years in which too many have churned out high-density cookie-cutter apartments, priced and designed so only an investor could love them. One happy side effect of a slowdown is that developers are reconsidering plans for high-rise towers and seeing whether the space might not be used in ways better designed to seduce cautious buyers.

Not a moment too soon. Savills and Design for Homes have spent many happy hours analysing 4,000 drawings by children of their “dream homes”. Few are convinced of the merits of apartment living, with most longing for a detached home in the country. As shown on www.kidsdreamhome.co.uk , a garden ranked highly, alongside room for dogs and horses.

Alas, another generation of buyers may be at risk of acute disappointment as they try to reconcile dreams and reality. But at least time can heal all wounds: Chorley Old Hall, now the crowning glory of Alderley Edge, was once dismissed as a slum hemmed in by “pigsties, dung heaps and slaughter houses”. Such a description puts a move to Swanage, Newhaven or Harlesden right into perspective.

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