UK homebuyers may need up to 10 years for their first deposit - Kalkine Media

July 14, 2023 08:31 PM AEST | By Daniel Tannenbaum (Contributing Author)
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According to recent research conducted by Generation Rent, aspiring homeowners in England now face an arduous journey of almost a decade to save enough for a home deposit.

The growing unaffordability of the housing market, characterised by soaring rents and higher house prices, has extended the average saving period from 6.8 years in 2012 to a staggering 9.6 years.

This alarming trend paints a worrisome picture for first-time buyers, potentially delaying their entry into homeownership until their 40s.

What is the situation for prospective homebuyers?

Years of relentless property price growth and record-high rents have compounded the challenges faced by prospective homebuyers. These factors have significantly increased the hurdle of accumulating a sufficient deposit.

The new research underscores the daunting reality that many individuals will be unable to purchase their first home until well into their 40s. It is evident that the dream of homeownership is slipping further away for a generation burdened by mounting financial pressures.

Moreover, the financial strain caused by escalating household bills puts individuals in a precarious position, often having to make tough choices regarding their spending habits.

According to household utilities firm, Warmable, the cost of heating, electricity, water and other utilities continues to rise, sacrificing other essential expenses or cutting back on discretionary spending becomes a necessary trade-off in the pursuit of homeownership.

Are there regional differences across the UK?

While the national average paints a bleak picture, it is important to note the substantial regional variations in deposit saving times. In the north-east of England, the situation remains relatively stable, with individuals requiring an average of about 4.6 years to save for a deposit, mirroring figures from a decade ago.

However, London emerges as the worst-affected region, where the average time to step onto the property ladder stands at a staggering 18.3 years for those living in a flatshare. Astonishingly, individuals renting independently in the capital would need to save for a daunting 27 years to accumulate a deposit.

What are the average deposit requirements for first-time buyers?

Data released by Halifax earlier this year revealed that the average deposit for first-time homebuyers in 2022 surpassed £62,000, representing an 8% increase compared to the previous year.

The growing deposit requirements further exacerbate the challenges faced by aspiring homeowners, rendering their path to ownership even more challenging. With each passing year, the financial burden becomes more burdensome and seemingly insurmountable.

Are there alternative mortgage options available?

While the traditional route of saving for a deposit proves unfeasible for many, there are some mortgage options available that offer an alternative solution. These options allow prospective buyers to purchase a home without requiring a substantial upfront deposit, albeit with certain conditions.

In May of this year, the Skipton Building Society introduced a 100% mortgage tailored specifically to first-time buyers who struggle to save for a deposit. This innovative offering, the first of its kind since the 2008 financial crisis, seeks to provide a glimmer of hope for those yearning to fulfill their homeownership aspirations.

What needs to be done to alleviate the situation for first-time buyers?

In light of these challenges, it is crucial for policymakers, housing organisations and financial institutions to address the issue holistically. Initiatives that focus on increasing the affordability of housing, implementing rent control measures and providing financial support or incentives for first-time buyers can help alleviate the burden faced by individuals.

Additionally, promoting energy-efficient practices and affordable utility tariffs can help mitigate the impact of rising household bills, freeing up more income for saving purposes.

Urgent action is needed to address the growing unaffordability of the housing market and ease the strain faced by those striving to step onto the property ladder. Otherwise, the dream of homeownership may continue to elude a generation, consigning them to a prolonged period of uncertainty in the rental market.


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