First-time buyers desperate to step on to the Oxfordshire property ladder are being urged to exercise caution as house prices continue to soar out of reach.

The Land Registry revealed today that an average house in the county cost £158,865 between January and March 2001 compared with £145,718 last year.

Values fluctuate every month depending on sales - the average price was £163,972 towards the end of last year - but the general trend remains upwards.

Oxfordshire's scenery, lifestyle and speedy links to London have made the area a much sought-after location.

But City watchdog, the Financial Services Authority, said that would-be buyers were being offered higher mortgages which could spell disaster.

Spokesman Rob McIvor said some banks and building societies, faced with intense competition, were now lending up to five times borrowers' salaries. Previously, it was three times a person's salary or two-and-a-half for a joint income. The new rates are not illegal.

Mr McIvor said: "First-time buyers should exercise caution. Prices will eventually fall so it might be worth holding on. When this happens, people who stretched themselves will suffer negative equity.

"Economic conditions could also change leaving people with less money to spend, thus making it even harder for them to afford their mortgages."

Antony Davenport, of Andrews Estate Agents, in High Street, Oxford, said: "It is our view that if the market was to downturn, the worst affected individuals would be those who have purchased for the first time and have stretched themselves in order to do so."

The cheapest property offered by Andrews is a studio apartment in Stanley Road, east Oxford, priced £79,950. The most expensive is a four bedroom house in St Ebbes costing £365,000.

David Lee, owner of Lee and Lindars estate agents, Headington, said: "Many first-time buyers need parental assistance these days and my advice is don't overstretch yourself.

"People tend to reach their earnings peak earlier now but things can change very quickly. We can all remember the nightmare of negative equity in the early 1990s."

The cheapest property on Mr Lee's books is a two-bedroom maisonette for £97,950 in Wheatley with the most expensive a seven-bedroom house in Bloxham for £650,000.

Emma Walton, an administrator for Alexander Estate Agents, Market Square, Bicester, said their cheapest property is a £62,500 ground-floor studio flat with the dearest a four-bedroom detached bungalow for £227,500.

She said: "A lot of first-time buyers are shocked when they see the prices.

"Any low-cost housing goes very quickly and then the price goes up when it's sold on. But around here you are still looking at £75,000 for a one-bedroom flat."

Tanya Hall, of Knight Frank, Worcester Green, Oxford, who deals in letting properties, said: "I can see why it would be practically impossible for a lot of first-time buyers.

"We are seeing younger people renting houses in the short term with a view to buying when the price is right. But some end up renting for years because of the cost."

Research from Cambridge Econometrics, an independent think-tank, shows that house prices in the south east this year are four times that of the average household income.

Conditions are now similar to the last big housing crash in the late 1980s.

*Listed here is a break-down of property type values between January and March this year compared with last year.

A detached house rose from £236,974 to £247,155; a semi-detached from £121,997 to £136,958; a terraced from £109,039 to £126,206 and a flat or maisonette from £86,894 to £102,823.