Average mortgage deposit now swallowing up over two years of homebuyer income

New research has revealed the extent of the growing affordability crisis in UK housing as average UK homebuyers are currently required to hand over almost 26 months of net earnings in order to cover the cost of a 20% mortgage deposit.

Related topics:  Finance,  Property,  Housing Market,  Deposit
Property | Reporter
20th September 2023
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"Unlike generations gone by, even if you earn a competitive salary you’re facing an uphill task of affording a deposit"
- James Forrester - Barrows and Forrester

The research comes from estate and lettings agent, Barrows and Forrester, which compared net salaries and average mortgage deposits of 20% to work out how many months of income is required to accumulate the average mortgage deposit.

In London, people typically earn £2,800 after tax, but that amount is dwarfed by an average mortgage deposit (20%) of £105,600 - more evidence that house prices are increasingly running away from salaries.

Indeed, even if you didn’t spend any money on necessities like food, as well as rent, you would have to save for 37.2 months before you could afford a deposit in London, making it all but impossible for anyone who doesn’t have an extremely well-paid job.

Other challenging regions

Buying isn’t just near impossible in London, as it’s harder than average in the South East, South West, and East of England.

In the South East, take-home pay of £2,400 per month would need to be saved for 32.3 months to afford a 20% deposit amount of £78,300.

South West buyers would need to save earnings of £2,100 for 31 months to afford a deposit of £64,200.

Finally, in the East of England, earnings of £2,300 would need to be saved for 30.4 months to afford a deposit of £70,200.

Saving time shorter in cheaper regions

Even though earnings are so much lower in regions like the North East, Northern Ireland and Scotland, you can save for a deposit in roughly half the time as the capital.

In the North East, take-home pay of £2,000 compares to a 20% deposit of £32,200.

It would still take 16.3 months to save for a deposit if you didn’t spend money on living costs, but buying in that region is at least attainable for those who earn well.

It’s a similar story in Northern Ireland and Scotland, where if you somehow saved all your take-home pay it would take 17.3 and 17.8 months to save for a deposit respectively.

Managing Director of Barrows and Forrester, James Forrester, commented: “The UK is facing an affordability crisis, and that’s underlined by the state of the housing market.

"Unlike generations gone by, even if you earn a competitive salary you’re facing an uphill task to afford a deposit.

"Given that mortgage rates have skyrocketed in the past year, it’s also very tricky to have the required salary to service the repayments, especially in regions with high house prices, like London and the South East.

"To ease the UK’s affordability crisis the government needs to do all it can to boost housing supply both in the private and public sectors.

"There’s also a need to increase wage growth, which can only come by making the UK an attractive place for businesses to grow and flourish.

"Clearly it’s easier said than done, but having prices climb out of step with salaries threatens social cohesion and puts a gap on aspirations of the UK’s younger workforce.”

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