It will apparently take today’s average low-income family 22 years to scrape together enough to buy their first home. Is it really worth all the effort and sacrifice?
Last week was a landmark moment for me and my Herculean attempt to get a deposit together for a house. I filled up my cash Isa allowance, and three months before the new season begins too. I’m pretty proud I’ve managed to get that far over such a short space of time.
It’s a slightly hollow victory. For starters, my sister has been contributing to this little mound of savings (we’re buying together). If it wasn’t for her additions, I’d still have just 10% of the 10% needed to get my foot on the property ladder.
Adding up the cost of a deposit
Let’s do the maths on this. If it was just me, saving £200 per month, I’d probably need to save for a decade to buy a two bedroom place somewhere in London.
But then, factor in annual house price rises, say of 1% per year, and I’m going to have to save for another couple of years. If that growth pattern persisted, I’d have to pay stamp duty on my new home too, which would add an extra 3%, or another three and a half years to save.
Obviously, I’m not factoring in the tax-free interest on my savings, nor my capacity to earn and, consequently, save more. But by those calculations, it would take me 15 years to be able to buy a house. I’d be 41 by then.
So, I wasn’t surprised to read yesterday that it will take the average lower income family 22 years to save up enough money to to get a pot big enough for a typical deposit (£25,000). This is compared to three years of saving in 1997 and eight years in 2001, according to a Squeezed Britain report from thinktank Resolution Foundation.
Trials of a first-time buyer
The government is bringing in some new initiatives to help first-time buyers, but it seems people in my position face an improbable and lengthy hurdle to overcome.
One part of me thinks I should give up and remain a tenant. But, having just moved to a new home, my rental costs have increased by 10% this year, not to mention commuting fares up by 8%. I don’t want to carry on paying somebody else’s mortgage, and I want a place I can truly call my own.
Should I persevere? And if you’re in the same boat as me, how long do you think it will take to get your deposit together?