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June 28, 2022

This is Money – What does it take to become a first time buyer today?

It seems with every passing year the homeownership aspiration shared by so many young Britons becomes an even more distant dream.

Surging house prices, soaring inflation and low savings rates mean that the goal posts are constantly moving.

The typical UK home has risen by 68 per cent over the past 10 years, according to ONS data, whereas average wages have only grown by 31 per cent during that time.

The average first time buyer attempting to get on the property ladder with a 20 per cent deposit requires £44,318 today compared to £27,530 needed ten years ago, according to Nationwide Building Society.

The average annual full-time UK salary is now £31,980, according to ONS figures, compared to an average national house price of £289,099, based on Halifax’s house price index.

That means average house prices are more than nine times more expensive than average earnings. The last time the gap between earnings and house prices was that high was more than 140 years ago, according to research by the asset manager, Shroders.

Back in 1995, two-thirds of people aged between 25 and 34 owned a property, according to the Institute of Public Policy Research.

It is therefore perhaps not surprising that today, that figure, has fallen to a quarter.

Last year, it looked like things couldn’t get any worse for prospective first-time buyers. House prices enjoyed double digit growth whilst savings rates hit rock bottom.

But the situation is becoming worse. The cost of living crisis has arrived to further decimate the morale of aspiring homeowners.

Households’ weekly savings are expected to fall as Britons take-home pay fails to keep pace with rising inflation, according to data from Scottish Friendly and the Centre for Economics and Business Research.

Read the full article

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