Continued evidence of a faltering housing market emerged today with Council of Mortgage Lenders (CML) figures showing the number of first-time buyers plummeted by 42% year-on-year to 14,500 in December.

The number of first-time buyers in December fell by 3% from November giving a total of 194,600 loans granted to first-time buyers last year – down 1% in number on 2009's 198,200, and vastly lower than the average of 600,000 first-time buyers who bought a home 10 years ago.

The figures also showed that the total number of loans for house purchase fell 4% in December to 39,900. In total, 529,300 house purchase loans and 313,200 loans for remortgages were advanced last year. The CML, which yesterday also said home repossessions had fallen for the fourth month running, claimed its figures showed evidence of a stable but subdued mortgage market last year.

The lastest LSL Property Services/Acadametrics house price index, also published today, shows the average house price in England and Wales fell by 0.1% in January compared to December. It said the number of transactions plummeted by 23% to 40,600 and is now running at just 60% of the long-term average.

The monthly fall, the fourth in a row, takes the average price of a home to £221,211, down £10,600 or 4.6% from the peak of £231,828 in February 2008.

Acadametrics says annual house price growth dropped to 0.6% in January, from 2.2% in December and from 7.8% in January last year. It says concerns over the direction of the economy and ongoing difficulties in obtaining mortgage finance continue to take their toll on house prices, but remarkably adds: "The good news is that downwards pressure eased in January, and we are not seeing anywhere like the price reductions we saw at the height of the last sustained fall in 2009."

The firm also says that despite the recent falls, the average price of a home is still £20,975 or 10.5% above the lowest price recorded in April 2009 during the last housing downturn. Dr Peter Williams, chairman of Acadametrics, adds: "There is no immediate evidence of a double-dip recession, although we anticipate that house prices will fall further in February."

But Matt Griffith, who runs the PricedOut website, which campaigns for first-time buyers and cheaper housing, says first-timers are facing an immovable problem. "House prices remain too high – prices are way out of line with earnings and banks simply do not have the funds to maintain lending at 2007 levels. An adjustment is needed.

"Whilst prices stay where they are, homeownership will remain a perogative of the wealthy, and first-time buyer numbers will remain at these historic lows. No amount of fiddling around the margins with gimmicky schemes like shared ownership, or public pleading with banks to lend more to first-time buyers can change this.

"With transactions at such low levels and banks unable to lend, sellers would have had to have taken a new year's resolution in positive thinking to be optimistic of what 2011 holds. First-time buyers are still sitting on the sidelines, and to be honest this is the safest place for them."

Richard Sexton, director of e.surv chartered surveyors, chose to put a positive slant on the figures. "There are positive developments on the lending front," Sexton explains. "Average loan-to-values (LTVs) have climbed back up to 59% recently – their highest level since May 2008 – suggesting lending criteria are loosening slightly. And volumes in the most expensive price brackets have held up much better than the overall market since the crunch began."

But an average LTV of 59% will do little to encourage struggling first-time buyers, and the fear is that a generation is being priced out of property ownership. As Griffith says, many people are putting off having families and paying a good chunk of their income to landlords as a result.

Indeed, UK private rental properties are being let within 15 days on average – five days quicker than a year ago, according to letting agent and property services group Countrywide. Its quarterly survey, out today, shows there are an average of 4.4 tenants vying for each property across the UK, with the south-west generating the greatest demand with an average of 5.9 tenants.

Housing minister Grant Shapps is holding a first-time buyer summit next week in a bid to improve conditions for those struggling to get a foot on the housing ladder. But many mortgage providers we spoke to had not been invited and invitations have not been extended to the media either – first-time buyers will be praying their concerns face a better reception from the coalition government.