Market Insight June / July 2019
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Less time needed to save for a deposit

Saving for a deposit remains the biggest hurdle to buying a home. In fact, for the typical first-time buyer in England and Wales, saving for a 15% deposit now takes 10 years and three months, or 15 years and nine months if  they’re looking to purchase their home in London. In other words, a single first-time buyer starting to save now could buy their home early in 2029.

It may sound like a considerable time to be saving – that’s because it is! On the bright-side, it is getting easier – a whole six months quicker than in 2016 when it took 10 years and 9 months to save for a 15% deposit in England and Wales. This decrease is because house price growth has slowed and incomes are rising more quickly.

While London tops the list as the place where it takes the longest time to save, the South East and South West follow behind at 13 years and six months and 13 years respectively.

For those living in the North it is a better story – eight years and six months for would-be first-time buyers looking to purchase in the North West, or six years and six months in the North East – half the time it takes to save for a home in the South East.

Sharing the burden helps too. A full-time working couple in England and Wales can save in half the time it takes a single first-time buyer. In just four years and nine months a couple buying together will have saved the deposit needed to purchase their first home.

By sharing rent and every day household costs, a couple buying in London take on average seven years and six months to save for a deposit, while in the North East – the quickest place to buy – it would take them just two years and nine months.

It’s actually quicker to save up for a deposit now, than it was ten years ago too – a whole year quicker in three out of ten regions for a single first-time buyer. London, the South East and the South West were the only areas where it took longer for a single person to save for a deposit in 2018 than it did in 2008.

Overseas investors are taking advantage of Brexit uncertainty, a stagnant property market and the weak pound to purchase high end homes in Great Britain. The shift in demand from UK buyers to foreign buyers since the EU referendum in 2016 continued, particularly in the capital. 57% of homes bought in prime central London were purchased by an international buyer in H2 2018, the highest level in six years and above the 40% recorded pre-referendum (H2 2015).

House prices, particularly at the top end of the housing market, have been falling for some time, and foreign buyers seem to be making the most of these discounts as the market bumps along the bottom. These discounts, along with the weak sterling, seem to be outweighing Brexit uncertainty when it comes to foreign buyers deciding on where to buy a home. A property that would have cost an EU buyer £1million in H1 2016 effectively cost £124,000 less in H2 2018 due to the sterling’s depreciation alone. This represents a 12% discount, ignoring house price falls in some prime locations, which offer further savings.

Time to Save for a 15% Deposit

Source: Hamptons International



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