Would-be first-time buyers must rent for longer
Potential first-time buyers must rent for longer as new figures reveal that it takes, on average, more than 10 years to save for a 15 per cent deposit.
Unsurprisingly, it’s those living in London having to save for longest – and rent for the longest too.
Nationwide reports that the number of people looking to rent continues to rise as potential purchasers struggle to save up for a deposit to secure a mortgage and get onto the property ladder.
Fresh data from Hamptons International shows that in the first quarter of the year, the average single first-time buyer would have to save for 10 and a half years to raise a 15 per cent deposit on their first home.
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.
“Slower house price growth in the capital has meant that it’s now six months quicker for a couple, who share household spending, to save up for a 15 per cent deposit in London.
“But it still takes a couple in London eight years to save up, twice as long as someone buying a home in the north.”
The average single first-time buyer, who started saving in Q1 2018 would not be able to purchase a home until the autumn of 2028.
A single Londoner hoping to buy for the first time would need to save for 17 years to raise a 15 per cent deposit.
In Q1 2018 the average couple buying for the first time would need to save for five years, which means that they could set up home by the spring of 2023.
A couple in London would need eight years on average to raise a 15 per cent deposit to acquire a property.
Saving for a 5 per cent rather than a 15 per cent deposit means first-time buyers can save faster, enabling some purchasers to qualify for Help to Buy, although borrowing rates tend to be less favourable compared to lower loan-to-value deals.
For a single first-time buyer it would take three years and nine months to save up for a 5 per cent deposit. This is over six and a half years faster than saving up for a 15 per cent deposit.
In Q1 2018 it would take a couple saving for a 5 percent deposit on their first home one year and nine months.
Head of Operations at Simple Landlords Insurance, Richard Truman, said: “The property market is changing, and people are going to be renting for longer, or increasingly renting for life. That’s potentially good news for landlords across the UK.”