While many investors look towards the UK property market as something of a “safe haven” it seems that investors are pricing first-time buyers out of the market. A report by the homeless charity Shelter has cast a very dark shadow across the UK property market and will concern many looking to climb onto the property ladder for the first time. So, what can first-time buyers in the UK expect if they are in a position to climb onto the property ladder?
Could you even afford a deposit?
The Shelter charity report was based upon a 20% deposit for a property which is standard across the UK at this moment in time. The report also took in an array of different situations regarding single individuals, couples and couples with children to give a broad outlook. So, what does this report show?
Perhaps the most damaging statistic, and indeed alarming statistic, is the fact that on average a single person living in London would need to save for an incredible 29 years just to put down a deposit on a London property. Yes, 29 years to cover a deposit and this is before we even look at mortgage payments! The situation is not quite as bleak for a couple living in London, one working full-time and one working part-time, but they would still need to save for just under 26 years to be able to afford a deposit.
These figures all assume that there are no savings prior to the decision to invest in the UK property market.
Outside of London
As you might have expected, bearing in mind the massive rise in property prices across London, the situation outside of the capital is on average less onerous. This report confirms that in 70% of counties across England a couple with a child would need to save for a decade with 30% needing to save for at least 15 years. This is both a reflection of non-London property prices and the different income scales across England.
These figures are based upon average incomes, average prices and average deposit rates although there will be more niche markets were the situation is less onerous and others where it is more severe. If nothing else this report confirms that if you’re looking to buy property in the UK it is vital that you do your research, it is vital that you have the finances to hand and you plan ahead. Can you imagine beginning to look at the property market only to find out it could take you a decade to even save for the deposit!
While some experts continue to reject suggestions that the UK property market is now out of the reach of many potential first-time buyers, these figures show a very different situation. A single individual living in London on an average London wage would need to save for 29 years in order to be in a position to put down a 20% deposit on a property.
It is now time that the politicians looked towards more affordable housing for those on lower incomes because without any assistance it is inevitable that more and more people will be forced to rent. This in itself will push up the cost of property and become something of a self-fulfilling prophecy and a vicious circle.