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First time buyers now saving for four years Image

10th October 2018
First time buyers now saving for four years

According to the Evening Standard's Homes & Property Newsletter, first-time buyers are spending an average of four years working overtime, taking no holidays, cutting out takeaways and moving back in with their parents in order to save for a deposit.

Aspiring buyers typically set aside 20 per cent of their average household salary, amounting to more than £1,000 per month in London.

First-time buyers save about 70 per cent of their deposit themselves, which in London has now reached more than £100,000 in 12 of the 33 boroughs.

Buyers are most likely to make lifestyle changes, some of them pretty drastic, rather than compromise on the type or location of property they buy, according to a new report from Post Office Money, who surveyed more than 1,000 people who bought their first home in the past two years.

HOW DO PEOPLE SAVE FOR A DEPOSIT ON THEIR FIRST HOME?

Almost all the first-time buyers (92 per cent) said they sacrificed luxuries including holidays, nights out or takeaways. But more than one fifth of first-time buyers have moved home to save more money, either back in with their parents or finding a cheaper property to rent while saving.

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Cutting back on big purchases: Sean Wheatley bought in Forest Gate with two friends after saving hard for two years

 

Sean Wheatley, 38, works in acquisitions at a television distribution company. He bought a house in Forest Gate for £475,000 with two friends he’d been renting with in Hackney.

“It wasn’t really hard because I’ve been saving regular amounts for quite a long time, having had a good job for a while,” he says.

“It was mostly about cutting back on big purchases. Normally I’d go on a couple of holidays a year and I didn’t do any last year or this year. I’d also normally go out clothes shopping every season but since we decided to buy, if I’ve got a hole in my work shoes, say, I’ll get a new pair but nothing else.

“If you try and live on a diet of pasta and baked beans it’s like any drastic diet, you won’t stick to it.”

As well as cutting back on spending, 84 per cent of those surveyed also found ways to boost their incomes in order to save more, with a third of respondents taking on overtime, 21 per cent looking for a higher paying role and 17 per cent even looking for additional work.

WHERE ARE THE MOST AFFORDABLE AREAS IN THE UK FOR FIRST-TIME BUYERS?

The research questioned people who have managed to buy a first home within the past two years, and so does not address affordability concerns of aspiring first-time buyers or those who feel priced out of the market completely.

Saving for an average of four years also meant that many first-time buyers found they could no longer afford to buy in their chosen location in a rising property market.

Post Office Money created an online tool mapping affordability in different locations and has pinpointed the UK’s 10 most affordable areas for first-time buyers.

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Rotherham: the city has become more affordable for first-time buyers over the last year (Alamy Stock Photo)

 

Comparing the average first-time buyer income in each area with the average house price, the lender found three cities where first-time buyers could afford to buy in every neighbourhood: Blackpool, Lincoln and Hull.

Blackpool was the most affordable with an average house price of £112,000 and local household income of first-time buyers averaging £39,600.

Reading was one of the least affordable cities for first-time buyers, with the average house price totalling £305,000. No neighbourhoods in the popular commuter hub were considered affordable to the region’s first-time buyers compared to five years ago when 67 per cent were within budget for local first-time buyers.

“Due to house-price growth outpacing the average wage increases of first-time buyers, properties are slightly less affordable than they were a year ago,” said Ross Hunter of Post Office Money.

“In areas of relatively strong house price growth, such as the Midlands and Southern England, for instance, prices increased between two and three per cent in 2017, despite first-time buyer income being broadly flat.

“However, first-time buyers should not be disheartened. There is still a large number of areas with high-levels of affordability if FTBs are willing to search.

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