Single first-time buyers need over a DECADE to save up a deposit and it could take Londoners 17 years
SINGLE first-time buyer face saving for just over a decade to raise a 15 per cent deposit, rising to 17 years for someone trying to get on the property ladder in London, a report has found.
Across England and Wales, the average single first-time buyer faces saving for 10 and-a-half years to raise a 15 per cent deposit on their first home, according to Hamptons International.
This means someone starting saving now could expect to buy their first home in 2028 – or 2035 in London.
The research used Office for National Statistics (ONS) earnings figures for people aged in their 20s, reflecting the age of people saving for their first home, and took into account potential pay rises as households move up the career ladder.
It assumed that households could save 22 per cent of their remaining income towards a deposit, after regular bills were taken into account.
It also assumed wages and house prices would increase in line with Office for Budget Responsibility (OBR) forecasts and that first-time buyers would buy a home priced at around 85 per cent of the average house price in their region.
The time it takes to save for a deposit has fallen slightly.
A year ago, it would have taken 11 years to save, according to the calculations.
The slightly faster time scale compared with the situation a year ago reflects slower house price growth and a rise in incomes, the report said.
Meanwhile, a couple saving together to get on the property ladder would take around five years to raise a 15 per cent deposit – meaning they could set up home in 2023.
The fastest place to save for a 15 per cent deposit in the study is in the North East, where it takes a couple just under three years and a single person six years and three months.
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a grim task but there are schemes out there to help first-time buyers own their own home.
Help to Buy ISA – It’s a tax-free savings account where for every £200 you save, the government will add an extra £50. But there’s a maximum limit of £3,000 which is paid to your solicitor when you move.
Help to Buy equity loan – The government will lend you up to 20 per cent of the home’s value – or 40 per cent in London – after you’ve put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime ISA – Another government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards your first home. You can save up to £4,000 a year and the government will add 25 per cent on top.
Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you’re restricted to specific ones.
“First dibs” in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative – A government scheme that will see 200,000 new-build homes in England to be sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest .
The report also looked at how long it takes for people to save a 5 per cent deposit – the level of deposit people often put down when using Help to Buy schemes.
It found that for a single first-time buyer it would take three years and nine months to save up for a 5 per cent deposit – over six years faster than saving up for a 15 per cent deposit.
A couple saving for a 5 per cent deposit on their first home could typically expect to do so in one year and nine months.
Aneisha Beveridge, an analyst at Hamptons International, said: “Saving a deposit is still the biggest barrier to buying a first home.
“It takes a single person more than a decade to save up in the current climate. But the additional support from Help to Buy brings down the time it takes to raise a deposit by over six years for a single first-time buyer.”
She continued: “It still takes a couple in London eight years to save up, twice as long as someone buying a home in the North.”
In May, we revealed how to get the best mortgage if you’re a first-time buyer – and all you need is a 5 per cent deposit.
In November, research by Aldermore Bank revealed that first-time buyers underestimate how much they need for a deposit by £15,000.
Today, a former adviser to Theresa May called for a million new homes to be built for under 40s to help ease the housing crisis.
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