First-Time Buyers Face 22-Year Wait to Get On the Property Ladder

Today the UK’s leading financial capability charity The Money Charity releases The Money Statistics, giving an overview of the financial situation in the UK.

 

New statistics reveal it could take the average person over 22 years to save up for the deposit on their first home. The latest Money Statistics report, out today, has uncovered that despite an improving economic outlook, many young people are still left struggling to buy their first home.

 

Based on figures from the Council of Mortgage Lenders, the average deposit for a first-time buyer is £27,719. And with the average household saving 4.9% of their income it would take 22 years for someone on the average salary, saving the average amount per household every year in an instant access savings account, to afford the average first-time buyer deposit.

 

And the picture isn’t much better for those savvy enough to take advantage of the tax-free interest they get from an ISA. If someone on the average salary saved 4.9% of their income, the equivalent to just over £100 a month, in an average instant access savings account for a year, they would receive £4.69 in interest after tax. If they saved it in an average cash ISA, they would receive £10.63. Meaning it would still take them 21 years – reaching their goal a year earlier than in a standard savings account.

 

These findings paint a particularly bleak view of the prospects for young, first time buyers trying to get their feet on the property ladder. And goes further to explain the reasons behind the growing number of adults choosing to still live with their parents, and the disillusionment felt amongst a generation hoping to own their first home without needing to rely on the help of their parents or family members.

 

Michelle Highman, Chief Executive of The Money Charity comments:

 

“This particular statistic published in our new Money Statistics makes for very grim reading, and there is certainly no denying things are tough for first-time buyers; not only are most young, hardworking people struggling to save the large sums of money needed for a deposit, but new rules mean they will also face stricter checks before being granted a mortgage.

 

However, the research clearly highlights the importance of planning ahead for major purchases, like a home. It crucial not to get disillusioned by the prospect of saving, it is still important to have a buffer against unexpected costs, and saving even a small amount each month can be worthwhile. You never know when you might need it.

 

Creating a budget is one of the best ways to help manage your money in order to tackle debt, rein in your spending and even start saving. The Money Charity has a range of free tools and resources to help you get on top of your money (themoneycharity.org.uk). If you worried about keeping up with your debts, seek advice from one of the free and independent organisations available, including StepChange Debt Charity (0800 138 1111).”

 

Latest figures include:

 

  1. £54,828: average household debt (including mortgages) in June, up from £54,750 in May
  2. 1.587m: estimated number of people in work who pay no income tax
  3. 12.67m:number of household with cash savings below £1,500
  4. £78.93: annual increase in consumer credit lending per adult
  5. 1,261 people were made redundant every day between March and May
  6. £23,412:– average annual salary excluding bonuses
  7. Every 4 minutes 51 seconds someone was declared bankrupt or insolvent
  8. £1.448 trillion was the value of outstanding personal debt at the end of June, up from the same period last year
  9. £705.79: average monthly private sector rent
  10. 71 properties are repossessed every day

 

You can get the full picture at http://themoneycharity.org.uk/money-statistics/

 

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Notes to Editor:
  • The calculations in this press release are based on the average household saving ratio, so in reality an individual is likely save a lower percentage than 4.9% and therefore would take even longer to save the same deposit.