Singletons need to save 11 years for a deposit
First-time buyers saving for a 15% deposit themselves would finally be able to move in to their property in spring 2028, according to research from Hamptons International.
The estate agent found that for a couple it would take an average of six years and three months to save up a 15% deposit, meaning they could move in by the spring of 2023. The figure is not exactly double because of assumptions on salary and compound interest.
For Londoners the wait is even greater: a singleton would need to save for an average of 17 years and nine months, up from the 17 years and six months needed at the end of 2016. This means they would finally be able to get on the property ladder at the end of 2034.
Couples would need to save their pennies for 10 years and nine months, meaning they could get their house keys in 2027. Perhaps it is no wonder that around 1.8 million UK adults have stayed in a bad relationship just to get on the housing ladder.
Hampton International’s ‘ability to buy index’ which shows how much first-time buyers have left after tax, national insurance, spending on essentials and paying the mortgage, is now 139 compared with the 2007 average of 100. The improvement reflects the fall in mortgage rates from 6% to 2% over the period.
Lower house prices in some parts of the country also play a part, though in London where house price growth has outstripped growth in incomes, it has wiped out the effect of lower interest rates. The rising costs of essentials, due to inflation, is also beginning to eat into household incomes.
The ability to buy in the South West has improved most since 2007, but this reflects the difference in timing rather than the performance in the region. It was harder to buy in the South West than in other regions in 2007, but it caught up in 2009. Like other regions it has been on a slow upward trend.
Fionnuala Earley, residential research director at Hamptons International, said: “Saving a deposit is still the biggest barrier to buying a first home. It takes a single person more than 11 years to save up in current conditions. But once over that hurdle, falling mortgage rates have taken the pressure off first-time buyers over the last 10 years. Their ability to afford a mortgage after tax, rent and spending on essentials, has improved across the whole country – with the exception of London where ability to buy has seriously deteriorated since the start of 2012.
“While it’s encouraging that new buyers now have a greater financial cushion than a decade ago when they buy a home, the time it takes to save a deposit still prevents many from realising their dream without outside help.”