Saving for a 15% deposit
In Q1 2018 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. This is slightly down on the 11 years recorded in Q1 2017 and reflects slower house price growth and a rise in incomes.
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.
Sharing rent and every day household costs such as food and bills means that a couple can save faster – under half the time of a single first-time buyer. In Q1 2018 the average couple buying for the first time would need to save for five years - unchanged from 2016.
This means that the average first-time buyer couple who started saving in Q1 2018 could set up home by the spring of 2023.
A single Londoner hoping to buy for the first time would need to save for 17 years to raise a 15% deposit whereas a couple would need eight years.
It is now six months quicker for a couple to save up for a home in London than at the same period last year. A slowdown in London house price growth and higher income growth explains the change.
In Q1 2018 a single first-time buyer in London would not be able to move into their new home until 2035.
The fastest place to save for a 15% deposit is in the North East, where it takes a couple just under three years (two years nine months), and a single person six years and three months.
Saving for a 5% deposit
Saving for a 5% rather than a 15% deposit means first-time buyers can save faster. Five per cent is the minimum deposit needed to qualify for Help to Buy. 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, this compares to five years when saving for a 15% deposit.
But in London the time to save for a 5% deposit rises to three years for a couple and five years and nine months for a single first-time buyer (table 2).
Aneisha Beveridge, Analyst, Hamptons International said: “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.”
