{"id":6094282,"date":"2023-06-08T11:34:56","date_gmt":"2023-06-08T10:34:56","guid":{"rendered":"https:\/\/www.buyassociationgroup.com\/en-gb\/?p=6094282"},"modified":"2023-06-08T11:34:56","modified_gmt":"2023-06-08T10:34:56","slug":"first-time-buyers-slo","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/en-gb\/2023\/06\/08\/first-time-buyers-slo\/","title":{"rendered":"‘Long slog’ for first-time buyers means more demand for rentals"},"content":{"rendered":"

A new report has revealed just how long it could take for today’s first-time buyers to save for a deposit, and it’s pushing the housing ladder further out of reach for many.<\/strong><\/p>\n

The gap between wages and house prices is widening, meaning that the length of time – or the salary required – to be able to save enough for a deposit on a home is putting many would-be buyers<\/a> into difficulty.<\/p>\n

Although the average age of first-time buyers is currently around 33 years old, according to government figures, the latest analysis conducted by Interactive Investor<\/a> indicates this could be much higher in some parts of the country.<\/p>\n

In what was described as a ‘long slog’ by Alice Guy, head of pensions and savings at Interactive Investor, the average length of time for a 21-year-old earning a median wage and saving 10% of their take-home pay to amass enough cash for a house deposit is 13 years. This means they won’t get onto the property ladder until they’re 34 years old.<\/p>\n

But if you look at London, where the average home costs around \u00a3523,325, according to the latest ONS data, the same 21-year-old on an equivalent wage in the capital could take 19 years to save up a deposit at the same rate, meaning they’ll be 40 years old before owning a home.<\/p>\n

The income\/house price mismatch<\/h4>\n

The fact that the gap between salaries and property values<\/a> is wider than ever means that it has never been more difficult for first-time buyers to save up. This tallies up with the fact that rental demand<\/a> is sky-high across many parts of the UK, as people remain renting for longer than ever.<\/p>\n

Many would-be first-time buyers may become permanent tenants, making the most of the additional freedom and flexibility that renting brings, without having to make the financial sacrifice of saving for a deposit. For those that do strive for homeownership, many are increasingly turning to family for help.<\/p>\n

Interactive Investor’s report demonstrated the difference between saving for a deposit in London, the most expensive region, and saving for one in the cheapest place in the country, the north east.<\/p>\n

The average home in the north east will set you back \u00a3156,912, while the average salary for a 21-year-old living there is \u00a318,944, rising to \u00a325,730 for 22-to-29-year olds and \u00a331,951 for 30-39-year-olds. In this part of the country, first-time buyers looking at these averages will take eight years to save for a deposit.<\/p>\n

On average across the UK, the analysis also narrowed down the length of time to save for a deposit depending on if you’re a high, low or middle earner. High earners will take an average of just nine years to save up to buy a home, compared with 13 years for middle earners and 16 years for low earners.<\/p>\n

First-time buyers: don’t overstretch<\/h4>\n

As Interactive Investor’s Alice Guy points out, many young people may never own a home. This is why the private rented sector<\/a> is now more important than ever, with landlords offering crucial accommodation to those who want to live independently but can’t afford – or do not want – to buy.<\/p>\n

Particularly with the rising cost of living, saving 10% of your take-home pay each month is not an easy feat, and many prospective first-time buyers may decide it isn’t worth it.<\/p>\n

Guy says: \u201cYoung people face a stressful juggling act with the triple whammy of high house prices, large student debts and needing to save if they want to start a family. And on top of this, they also need to start saving into their pension\u00a0if they want to achieve a comfortable retirement in the future.<\/p>\n

\u201cFor previous generations it was relatively easy to live on beans and toast for a few years, knowing that home ownership would be possible after a few frugal years. But now young people have a long slog ahead and it\u2019s easy for something to trip them up along the way, perhaps a period with lower pay or having children earlier than planned.”<\/p>\n

Guy also points out the importance of family help for many young people to become first-time buyers, but says this means there is a “widening gap between the haves and the have nots”.<\/p>\n

\u201cIt\u2019s encouraging to see that some lenders are now offering mortgages with lower levels of deposit needed. But most of these mortgages need a guarantor, usually a family member who will step in if you can\u2019t repay your loan.<\/p>\n

“Homeowners will also need to be carefully not to overstretch, especially as house prices are currently falling. If they buy a house on a 100% mortgage and house prices fall, they could end up with negative equity where the mortgage they owe is more than the house is worth.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

A new report has revealed just how long it could take for today’s first-time buyers to save for a deposit, and it’s pushing the housing ladder further out of reach for many. The gap between wages and house prices is widening, meaning that the length of time – or the salary required – to be… Read more »<\/a><\/p>\n","protected":false},"author":1069,"featured_media":6088932,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[6,2],"tags":[251,73,98],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6094282"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/comments?post=6094282"}],"version-history":[{"count":5,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6094282\/revisions"}],"predecessor-version":[{"id":6094294,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6094282\/revisions\/6094294"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media\/6088932"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media?parent=6094282"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/categories?post=6094282"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/tags?post=6094282"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}