Public services are under threat in a town because soaring house prices are driving away young families.

Woodstock's reputation as one of the most attractive small towns in Oxfordshire has sent house prices skyrocketing beyond the means of many people who were brought up there and are looking to buy their first home.

Schools have reported falling attendances, the town's Scout group has been disbanded and many young residents brought up in Woodstock are abandoning the town for areas where accommodation is cheaper.

Today, about 35 per cent of the population are older than 65.

Estate agents Chancellors say that prices have increased by 25 to 30 per cent in the past three years and the town council have responded by launching a housing needs assessment to gauge the demand.

One of the cheapest homes for sale at Chancellors is a two-bedroom flat in Glynne Close for £90,000.

Last month, the average price of a home in Britain was £82,188 according to Nationwide.

Woodstock town and district councillor, Julian Cooper, said: "The town council gave the assessment the green light to demonstrate that their is a need for affordable property and it should go ahead some time in the next few months."

West Oxfordshire District Council have earmarked Woodstock as an area for development in their ten-year plan and the town council hopes that any new building will include a substantial proportion of affordable housing for young families.

Andrew Walkey, the headmaster of Woodstock Primary School, said that pupil numbers were already dropping.

He said: "School numbers have gone down from a peak of 216 pupils in 1997 to 189 today. We have spare space for more pupils and if numbers fall to 150-160 then we would have to look at redundancies."