A typical single first-time buyer in London will have to save for 17 years – from now until 2035 – to raise enough cash for a 15% deposit on a home. That is up from the 15 years recorded in both 2008 and 2013, and despite house price falls in the capital since the Brexit vote two years ago.
Across England and Wales, the average single first-time purchaser would need just over 10 years to save up a deposit of that size, according to a report from Hamptons International. The research provides fresh evidence that saving enough for a deposit is still the biggest barrier to getting on to the property ladder.
However, saving enough cash to put down an initial 5% of the property’s value – which would allow the buyer to take out a 95% mortgage and also to access the government’s help to buy scheme – would take a lot less time: five years and nine months in London, and three years and nine months for England and Wales as a whole.
The report looks at how long it would take a buyer to amass a deposit if they started saving today. It takes into account how
much money first-time buyers have left to save from their incomes after tax, national insurance, rent, council tax and spending on essentials such as food, transport and utility bills. It assumes households can save 22% of what is left towards a deposit.
The researchers used Office for National Statistics earnings figures and focused on people in their 20s, reflecting the typical age of those saving for their first home. They took into account potential pay rises as households move up the career ladder, and assumed wages and house prices would increase in line with Office for Budget Responsibility forecasts.