Many people will have made a resolution to start saving to buy their first home this year, not least because rents continue to rise – our analysis shows that average rents in Great Britain have increased by almost a third since October 2020. But how long could it take to save up?
Of course, this will depend on many factors, including property prices in their area, their salary and how much they can afford to save each month. It also hinges on the size of deposit they manage to amass, plus whether they are planning to buy alone or as part of a couple.
Across Great Britain, the average price of a first-time buyer home is £245,430, according to the Office for National Statistics. Let’s assume a couple who both work full-time and each earn the average salary of £39,720 manage to save 5% of their monthly gross income, which is probably a realistic figure given they are likely to have to pay rent. If they earned 5% interest on their £331 monthly savings, it would take them just over 5.5 years to pull together a 10% deposit for their property purchase.
In London, although the average gross salary is significantly higher, at £55,880, so too is the average price of a first home, at £456,290. Here, it would take a couple saving 5% of their pre-tax income each month over 7 years to build up to a 10% deposit.
In reality, however, due to banks’ stress testing rules and the expense of homes in the capital, Londoners tend to put down much bigger deposits, which obviously takes them longer to save. Based on the same scenario, it would take a London couple 9.8 years to raise a 15% deposit and 12.2 years for a 20% deposit.
Buyers in the North East of England should be able to get on the housing ladder the fastest. Here, the cost of the average first home is the lowest in the country, at £144,750. A couple each earning the average gross income of £33,540 and saving 5% of it each month would be able to save a 10% deposit in 4 years.
It would take a Scottish couple each earning £36,280 gross and buying a first home for the average £159,200 just over 4 years to save up for a first home deposit, while a couple in the North West of England would be able to get on the ladder in just under 5 years.
For couples saving to buy in Yorkshire and the Humber, Wales and the East and West Midlands, it would take them between 5 and 5.5 years to buy an average first home in these locations under the same scenario. This rises to between 6 and 6.5 years in the South East of England, the East and the South West.
Crucially, this analysis assumes no future house-price growth, which has in the past pushed up the price of homes faster than renters can save. It also demonstrates how pivotal the bank of mum and dad continues to be across the south of the country in particular to help would-be first-time buyers pull together a deposit and get themselves on the housing ladder.
