Graphic Version

Media

28 October, 2010

Broken Ladder: 3 years without rent, food, clothing – then you can afford a deposit.

New research out today reveals that the average first time buyer (FTB) would have to save every single penny of their earnings for more than two years to have a chance of getting a foot on the housing ladder. In London it would take three years.

Even over five years, young people have to save almost half of their take home pay every month to save a deposit for a house, with some areas even higher.

The Home Builders Federation has today released a report, entitled Broken Ladder identifying the increasing lack of affordability in the housing market at a time when supply is critically low – last year saw the lowest number of homes built since 1924 - and mortgage availability almost non-existent.

The shocking figures reveal that on average FTBs in their twenties would have to save 45% of their net income every month for five years to afford a deposit for the average starter home. In London and the South-East the figure is even higher with young people in the capital needing to save 60% of their net income to get on the housing ladder.

This means that even if a person in their 20’s was to save every penny for 27 months, they still wouldn’t be able to afford a deposit. In London it’s 35 months.

Because of this, the average age of the unassisted FTB has rocketed to 37, with even those on higher wages in their thirties struggling to buy. It has resulted in more and more people being forced to stay with their parents with nearly a third of men and a fifth of women aged 20-34 now still at home.

The report also reveals that FTBs aged between 22-29, who are privately renting while saving for a deposit, will have just 13% of their monthly net income remaining for council tax, bills and living expenses – for five years.

Stewart Baseley, Executive Chairman, said:

“These figures reveal the extent of our housing crisis. First-time buyers - the life-blood of the housing market - are almost entirely shut out. The lack of mortgage availability is further strangling a market already choking on a lack of supply. We desperately need an increase in lending and a properly functioning and sustainable mortgage market.

“At the same time, the Government must ensure that the new planning policy and incentives they are basing the success of their housing plans on are put in place immediately. Without more houses and more mortgages, young families will be unable to have the security of a roof over their heads and the housing crisis will very quickly reach the point of no return.”

Click here to download the report in full

For media enquiries, or to arrange an interview, please contact Steve Turner on 020 7960 1606 / 07919 307 760 or steve.turner@hbf.co.uk

Table demonstrating the First Time Buyer Affordability Gap

 

First Time-Buyer Aged  22-29

 

 

 

5 Year Saving

 

Region

Average House Price for First Time Buyer (£)

Deposit Needed (£)

Average (median) Net Annual Salary (£)

Savings necessary per year (£)

Saving needed per month as % of net income

Months needed to save deposit with no outgoings

UK

155139.80

37233.55

16419.17

7446.71

45

27

North-East

105941.40

25425.94

15160.61

5085.19

34

20

North-West

117268.40

28144.42

15602.90

5628.88

36

22

Yorkshire & The Humber

114362.37

27446.97

15328.28

5489.39

36

21

West Midlands

119273.39

28625.61

15135.77

5725.12

38

23

East Midlands

126491.32

30357.92

15561.50

6071.58

39

23

East

161760.92

38822.62

16028.63

7764.52

48

29

South-East

182501.78

43800.43

16973.24

8760.09

52

31

South-West

154397.49

37055.40

15289.64

7411.08

48

29

London

259931.36

62383.53

20973.17

12476.71

59

36

 

 

 

 

 

 

 

First Time-Buyer Aged  30-39

 

 

5 Year Saving

Region

Average House Price for First Time Buyer (£)

Deposit Needed (£)

Average (median) Net Annual Salary (£)

Savings necessary per year (£)

Saving needed per month as % of net income

Months needed to save deposit with no outgoings

UK

155139.80

37233.55

21406.49

7446.71

35

21

North-East

105941.40

25425.94

18934.91

5085.19

27

16

North-West

117268.40

28144.42

19586.96

5628.88

29

17

Yorkshire & The Humber

114362.37

27446.97

19921.61

5489.39

28

17

West Midlands

119273.39

28625.61

19870.55

5725.12

29

17

East Midlands

126491.32

30357.92

20522.60

6071.58

30

18

East

161760.92

38822.62

21111.86

7764.52

37

22

South East

182501.78

43800.43

23058.35

8760.09

38

23

South West

154397.49

37055.40

19974.05

7411.08

37

22

London

259931.36

62383.53

27181.79

12476.71

46

28

Notes to Editors:

1.     The Home Builders Federation (HBF) is the representative body of the home building industry in England and Wales. The HBF’s 300 member firms account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from multi-national, household names through regionally based businesses to small local companies: www.hbf.co.uk

 

2.     Average (median) earnings taken from the Office for National Statistics - http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=15313

 

3.     Average house price paid by first time buyers - http://www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/housingmarket/livetables/ (Table 508)

 

4.     Calculation for deposit taken from Council of Mortgage Lenders http://www.cml.org.uk/cml/media/press/2705

 

5.     18% of females and 29% males aged 20-34 still live with parents – ONS social trends.