Those wanting to purchase in London need to earn an eye-watering £77,000.
A new report released today has claimed that first-time buyers need to earn almost £41,000 in order to buy a home in the UK.
The study by KPMG shows that homes are unaffordable to first-time buyers earning an average salary in every region. The vast majority of people have to wait until they have a partner before they can purchase a property, if they don’t already have a substantial deposit, inheritance or money from the bank of mum and dad!
The KPMG economists used the average house price for first-time buyers in each region, and the average salary that would be required in order to secure a mortgage with a 10 per cent deposit.
First-time buyer home
Median first-time buyer earnings
Required annual wage
East of England
Yorkshire & Humberside
(Source: KPMG using ONS house prices and ASHE figures)
According to KPMG, in order to secure their mortgage with a 10% deposit, a typical Londoner would have to save £38,485.60, compared to the UK average of £20,276.50. Those living in Northern Ireland would have to save the least at £10,609.40 (just over a quarter of a Londoner’s deposit).
Save, save, save
To save enough for a deposit can seem like the impossible dream, especially if you have to cover rent too, but just saving a little each month could pay off long-term. Don’t give up on your dream just yet!
Put as much as you can away every month – a good place to start is to write down all of your outgoing – and we mean everything – from subscriptions to shopping trips. Then, see where you could cut back – are you spending a fortune on satellite TV that you never watch, or for a gym that you never go to? That’s all money you could put towards your deposit – it’s not going to amount to huge number overnight, but every little helps.
If you’re in a bit more of a rush to buy your own place and are you’re currently renting, you could consider moving back in with your parents (if they’ll have you!) for a set period of time – and the money you save you could put towards your deposit. Or you could downsize to somewhere smaller and cheaper for the short term?
You may wish to look into the government’s Help to Buy ISA scheme* which will be launching in Autumn 2015. You can read more about that here.
*It was reported in August 2016 that the government bonus on Help to Buy ISAs cannot be included in the initial deposit on a home, but is paid once the sale has completed. Find out more here.
Disclaimer: All information and links are correct at the time of publishing.