In Q3 2015 it would take 13 years for a single first-time buyer in England and Wales to save for a deposit, and some 46 years in London. However, the time to save in England and Wales has fallen since 2014 with single first-time buyers now able to save nine months faster.
The findings are published in a new Time to Save Index launched today by leading residential estate agents, Hamptons International. Time to Save, which presents the other side to Hamptons International’s affordability index, Ability to Buy, looks at how changing market and economic dynamics impact the average first-time buyer’s ability to save for a deposit – one of the greatest barriers first-time buyers face to entering home ownership. The index, which is published on a quarterly basis, dates back to 1999. Full details of the methodology and assumptions made appear at the end of this release.
Time to Save Index key findings for Q3 2015:
Single first-time buyers will take 13 and a half years to save a 15% deposit, 30 months longer than in 1999, but nine months faster than in 2014 – a sign that affordability has improved slightly.
For a single Londoner hoping to buy for the first time they’d need to save for almost 46 years. A year ago, they would not have been able to save a deposit at all unless they saved a larger slice of income each month.
In 2014 London households saw their affordability stretched more than at any time since the index began, but things eased a little in 2015. The expectation of higher wages and a slowing in future price growth means that a couple can save for a deposit three months faster than in 2014.
The North East continues to be the quickest place to save for a deposit with single buyers facing a wait of less than eight years.
Pooling resources with a partner or friend cuts the time to save significantly. It takes an average couple working full-time, three and a half years to save a deposit for a home, eight years in London and only two in the North East.
Lending criteria has softened a little and Help to Buy also makes a difference. Only having to save 5% thanks to an equity loan from the government would cut a further seven and a half years from the time to save for single first-time buyers.
The Help to Buy ISA scheme will also help reduce the time it takes to save for a deposit. The government bonus of up to £3,000 will cut the time a single first-time buyer has to save by between 9-12 months.
The introduction of the Lifetime ISA announced in the Budget will help savers even more. First-time buyers in England and Wales will be able to save almost three years faster using the ISA. In London, they’ll be able to save 19 years faster.
The expected pick-up in wages and slower house price growth in future is good news for those saving up for their first home. The smaller the gap between wage and house price growth, the sooner new buyers can save up the necessary deposit.
Fionnuala Earley, Residential Research Director at Hamptons International said:
“Affordability is still difficult for first-time buyers, but things did get better in 2015. House price growth slowed in England and Wales while wages increased, making it easier for first-time buyers to save up a deposit to buy their home. Conditions are hardest in the capital where house prices have surged since the crash. It takes almost twice as long for a Londoner to save up a deposit now as in 2008.
“The Chancellor improved the prospects for those saving a deposit when he announced the Lifetime ISA - available from 2017 – in last week’s Budget. Under the terms of the Lifetime ISA, single buyers will be able to save up to £4,000 a year and receive a 25% bonus from the government on every pound they save. They will be able to use these savings 12 months after opening the account to purchase a first home worth up to £450,000.
“This, together with the Help to Buy schemes and the increasing availability of higher loan to value lending, eases the pain for would-be first time buyers and dramatically reduces the time it can take to save up to purchase a property.”
For further information on Hamptons International please contact:
Press Office, Hamptons International
T: 0776 967 7825
Residential Research Director, Hamptons International
T: 07760 163 120
About Hamptons International
Hamptons International is a leading residential estate agent and property services organisation, operating in London and the South of the UK. With more than 140 years of experience in the property market and a commitment to industry innovation and exceptional levels of customer service, Hamptons International today offers a wealth of award-winning services including UK and international Sales, Lettings, Property Management, Corporate Services, Residential Development, Development Land, Valuation and Property Finance.
With headquarters in London’s Fitzrovia, Hamptons International has an international network of more than 87 offices and is a subsidiary of Countrywide, the UK’s largest estate agency and property services group.