For the very first time since 1995, first-time buyers make up a lot more than 50% from the property market, with 372,000 people buying their first home in 2022, according to new data from Halifax.
However, the average age of a first-time buyer has grown to 31 – 2 yrs over the age of 10 years ago – and in London it’s 33.
While the average UK property price for any first home has grown a lot previously Ten years – up 39% since 2008 – first-time buyers are putting down similarly-sized deposits. This means they’re buying homes at higher loan-to-value ratios, often resulting in higher rates.
Which? looks into where people are putting on the highest and lowest deposits, and explains other property buying costs you’ll need to consider.
How much are first-time buyers paying where you live?
In 2022, the typical UK deposit was lb32,841 – around 15% from the average property price, Halifax found.
The graph below shows the typical amount first-time buyers are putting down like a deposit in each UK local authority, along with the deposit like a number of the typical house price.
First-time buyers are paying the lowest deposits like a number of the purchase price in East Northamptonshire (lb19,871) and South Tyneside (lb13,778), where these sums constitute 11% from the average home value. This may be due to the average property being fairly cheap, at lb182,698 in East Northamptonshire and lb120,826 in South Tyneside, so that buyers are able to afford to borrow as much as 90% of its value.
By comparison, buyers in Camden, in north-west London, are putting on the highest percentage deposits, with the average first-timer paying a 30% deposit of lb194,373.
Why this type of high deposit? The typical cost of a house in Camden is really a hefty lb642,962. Even with higher-than-average London salaries, it’s likely first-time buyers may struggle to borrow more than 70% of the property price – at 4.5x your salary, you’d still need an annual salary of lb99,687. So saving a larger deposit might be their only option.
The size average deposits might surprise you, especially if you’d been thinking about obtaining a 95% LTV mortgage having a 5% deposit. We recently looked into whether saving more – obtaining a 15% deposit, rather than 10% – would open the doorway to higher rates.
Where are first homes least expensive?
Prices in the region you’re hoping to buy will determine what size of the deposit you'll need – and your earnings may influence how fast you can save up.
Taking into consideration the home price to average earnings ratio, Pendle within the North West arrives as the most affordable area UK-wide, the Halifax report found. First-time buyers typically pay a 15% deposit of lb13,224 and also the average first-time buyer house prices are just 2.6x the average salary. Indeed to obtain a 75% mortgage at 4.5x your salary, you’ll need an salary of lb16,806.
All 10 of the very most affordable local authority districts are in the North West of England and Scotland. Other areas include Copeland, East Ayrshire, Inverclyde, South Ayrshrie, Barrow-in-Furness, Hyndburn, West Dunbartonshire, West Lancashire and South Lanarkshire.
By contrast, within the London borough of Brent, the typical first-time buyer property is 13.3x the average salary. Here, first-time buyers are scraping together a 26% deposit of lb129,210 for a property costing lb500,088, typically. To have a 75% LTV mortgage, you’d still need to earn lb82,418.
Brent is one of nine London boroughs in the 10 least affordable local authority districts in the united kingdom, accompanied by Hackney, Newham, Hillingdon, Waltham Forest, Southwark, Haringey, Barnet and Harrow. Oxford is the only area outside of London on the list.
Things to consider when getting your first mortgage
While your mortgage deposit is a huge a part of making the home ladder, there are many additional factors you’ll need to arrange for.
There are lots of late charges to pay
In addition to your deposit, you’ll need money to cover a valuation, house survey, conveyancing, stamp duty (England and Northern Ireland)/land transaction tax (Wales)/land and buildings transaction tax (Scotland), removal costs, buildings and contents insurance.
It’s an extended list, which can add-on several thousands of pounds to your overall house-buying bill. So, make certain you’re prepared beforehand – it might mean waiting and saving up for a few extra months before beginning the entire process of buying your first home.
Options if you’re struggling to save
There are some government-backed schemes that are designed to help first-time buyers jump on the property ladder.
You could also consider purchasing a house together with your friends or getting the aid of your parents or members of the family.
What type of mortgage would you like?
Before choosing a lender, you should consider which kind of mortgage is best-suited for your circumstances. You will find three main types:
