Many would-be first-time buyers are being forced to rent longer despite a slowdown in house prices as new figures reveal that it takes an average of more than 10 years to save for a 15% deposit.
Nationwide reports that house prices dropped by 0.2% during the month of May, while the annual growth rate slipped to 2.4% from 2.6% in April, and yet the number of people looking to rent continues to rise as potential purchasers struggle to save up for a deposit to secure a mortgage.
Fresh data from Hamptons International shows that in the first quarter of the year, the average single first-time buyer would have to save for 10 and a half years to raise a 15% deposit on their first home.
The average single first-time buyer who started saving in Q1 2018 would not be able to purchase a home until the autumn of 2028.
A single Londoner hoping to buy for the first time would need to save for 17 years to raise a 15% deposit.
In Q1 2018 the average couple buying for the first time would need to save for five years, which means that they could set up home by the spring of 2023.
A couple in London would need eight years on average to raise a 15% deposit to acquire a property.
Saving for a 5% rather than a 15% deposit means first-time buyers can save faster, enabling some purchasers to qualify for Help to Buy, although borrowing rates tend to be less favourable compared to lower loan-to-value deals.
For a single first-time buyer it would take three years and nine months to save up for a 5% deposit. This is over six and a half years faster than saving up for a 15% deposit.
In Q1 2018 it would take a couple saving for a 5% deposit on their first home one year and nine months.
Aneisha Beveridge, an analyst at Hamptons International, commented: “Saving a deposit is still the biggest barrier to buying a first home. It takes a single person more than a decade to save up in the current climate.
“But the additional support from Help to Buy brings down the time it takes to raise a deposit by over six years for a single first-time buyer.
“Slower house price growth in the capital has meant that it’s now six months quicker for a couple, who share household spending, to save up for a 15% deposit in London.
“But it still takes a couple in London eight years to save up, twice as long as someone buying a home in the north.”
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