New figures reveal the average house price in Sunderland is £115,000 – six times the average city salary.
It would mean the average worker's wage packet would have to increase by a staggering £13,865 to meet mortgage repayments.
The looming crisis has prompted fears that many young people have been permanently excluded from the housing market, while there are concerns that others could be left homeless.
To receive a 95 per cent mortgage, based on the standard three-and-a-half times your salary, the average wage would need to be £32,262 – the actual average pay packet is £18,397.
Ross Wiseman, 21, a call centre worker from Russwarp Drive, Silksworth, Sunderland, said he was looking to buy his own home but simply could not afford to.
He added: "At the minute, I'm living with my parents due to lack of funds which would help me to buy a house for myself."
Meanwhile, Alan Kenely, 34, an off-shore worker, of Thorney Close, Sunderland, said he had also been priced out the market.
He added: "Buying a house is a good investment but because of the money involved the risks are just too high at the minute."
Tom Brennan, regional secretary for the GMB, believes the problem is spiralling out of control.
He said: "This is a worsening situation which needs to be addressed.
"Year on year, we are seeing the percentage gap increase between earnings and soaring house prices.
"I really feel for young people who are working endless hours to get on to the property ladder but still struggling to make it.
"The time has now come to do something about it.
"The only solution is a policy that designates homes exclusively for first-time buyers."
House prices in the North East have seen the fastest increases in the country during the past five years. At the same time, homelessness has increased by 60 per cent, according to the National Housing Federation.
Mr Brennan believes the whole local economy will suffer if young people are deterred from buying their own homes, while also claiming there could be social consequences.
He added: "A lot of these young couples can't afford to stop working to have a family because they have to pay the mortgage."
There were 7,000 new homes built in the region last year, but fewer than 10 per cent of these were affordable to first time buyers.
Monica Burns, National Housing Federation regional manager for the North East, said: "Rapid and dramatic house price increases are putting a huge strain on the existing affordable homes.
"The rise in Sunderland benefits current homeowners but threatens to exclude more and more people from getting a foot on the property ladder."


The average house price in the North East in 2005 was £126,129 more than double the average of £61,984 in 2000.
The average house price is now 6.3 times the average regional income.
House prices in the North East rose nearly 9.5 per cent in 2005, the fastest increase of any region in the country.
House prices in the North East have risen more than 130 per cent since 1997. Incomes have grown just 16 per cent in the same period.
By 2011 house prices in the region will have risen faster over the previous eight years than those of any other region in the country.
Homelessness has risen 64 per cent since 2000, the fastest increase in any region. In 2005, nearly 8,000 families in the North East were accepted as homeless by local councils.