New research by leading price comparison website MoneySuperMarket today reveals that the profile of a typical first-time buyer in the UK is changing, while the overall number of people getting on the property ladder has dropped by a staggering 45 per cent since 1994.
When looking at the changing face of home ownership, the data reveals that a large portion of Brits are putting their dreams of buying a home on hold and instead using their savings for short term commitments. While 34 per cent of Brits are saving for holidays and travelling, only a fifth of Brits (19 per cent) are currently putting their savings towards home ownership. In fact, more of the UK public are currently putting money away for a rainy day (22 per cent) than saving for a home.
This could be because getting on the property ladder has become more difficult over the last 20 years, with the average annual salary now accounting for only 11 per cent of the average house price in 2018, compared to 23 per cent in 1999. 16-24 year olds have been particularly affected, with a dramatic 68 per cent decrease in first-time buyers in this category between 1981 and 2016.
25-34 year olds are paying an average of 39 per cent more on rent than the over 55s did before purchasing their first home.
The data also reveals that there has been a 54 per cent increase in the number of 34-50 year olds renting from 1996 to 2016, with 60 per cent of 35-44 year olds citing a preference for renting over home ownership. A further 41 per cent stated that they weren’t earning enough to even consider saving for a home.
The current financial landscape means that more than a third of Brits (36 per cent) also find themselves compromising on the size of their property, while 29 per cent of those surveyed found they had to settle for a less preferable location.
More first-time buyers in the West Midlands (42 per cent) found they had to compromise on location when buying their first home than those in East Midlands (11 percent), while 48 per cent of West Midlanders also found they had to compromise on their budget, the most of any region in the UK. On the other hand, for Londoners the biggest issue was found to be space, with more than half (51 per cent) stating the size of the property to be their biggest compromise.
Kevin Pratt, consumer affairs expert at MoneySuperMarket, commented: “What used to be affordable 20 years ago now requires a significantly greater investment and, as a result, we’re seeing a shift towards renting and a change in attitudes towards savings.
“Anyone trying to build a deposit to put down on a property needs to make sure they are squeezing every last drop from their savings, whether that be in a savings account or in an individual savings account (ISA), where you could be eligible for a government bonus to help you on your way. It certainly pays to research what’s available to ensure you’re getting the best rate of interest.
“The same applies to mortgages. The bigger your deposit, the better but for those without money to put down, some lenders are offering loans of 100% of the property’s valuation. Whatever the mortgage you’re considering, make sure you look at what your monthly repayments would be to ensure you don’t overstretch yourself.”