Mortgages
Mortgages


Written by Editorial Team
25th September 2018

Post Office mortgages research shows first time buyers spend 4 years saving for their new starter home

Post Office Money research shows that the average first time buyer will spend 4 years savings for their first home deposit.

Their findings also show:

  • First time buyers commit 20% of their joint income to contribute to this deposit
  • English towns Blackpool, Lincoln & Hull are affordable hot-spots for first time buyers
  • In the UK 57% of properties sold were in areas affordable for fist time buyers

The research showed that people were prepared to live a leaner lifestyle to in order to make property ownership a reality. With the average deposit for a first home reaching £51,500 in the UK last year according to the Office for National Statistics, which ranged from £21,571 in Blackpool to £173,431 in London,  Post Office Money research found that new homeowners were able to set aside 24% in advance of their purchase. 30% of this deposit was found to be from family contributions.

Areas the research found where first time buyers were most willing to compromise to achieve the deposit they needed included:

  • Quality of lifestyle while savings – 31%
  • Length of time it took to save for the deposit required (e.g. did not care how long  it took) – 23%
  • Location of the new home – 19%
  • Specifications of the new home e.g. size of garden – 17%

Areas where commonly sacrifices were made include not going on holiday (31%); not going out (30%); missing out on takeaways (26%). Some lifestyle changes were found to be more radical – 1 in 5 (22%) were prepared to move back in with their parents or downgrade their current rental property (9%). People living in the North West were most likely to take on additional work to boost their income

The research found that not everyone found these sacrifices easy to maintain with one in five admitting that their motivation waned over time in the form of “saving holidays” where they opted out for a period of saving for their new home.

These findings showed that the main causes for this was a “need for a holiday”, special occasions or a need to dip into savings to fund a particular requirement.

Top 10 most affordable areas for local first-time buyers

County City Average house price 1-year
change
FTB income % of city affordable
Lancashire Blackpool £112,000 +6% £39,611 100%
Lincolnshire Lincoln £143,950 +3% £39,834 100%
East Yorkshire Hull £110,000 +2% £37,840 100%
South Yorkshire Rotherham £133,000 +0% £37,840 97%
West Midlands Sandwell £137,950 +8% £41,024 95%
Staffordshire Stoke-on-Trent £110,000 +5% £41,024 94%
Hampshire Southampton £210,000 +8% £56,429 94%
Greater Manchester Tameside £137,500 +7% £39,611 93%
South Yorkshire Barnsley £124,995 +5% £37,840 93%
Greater Manchester Wigan £130,250 +4% £39,611 93%
While many prospective buyers choose to make lifestyle compromises as they save towards their first home, there is no ‘right way’ to reach your deposit goals. Some FTBs will prefer to take longer saving for a deposit rather than cut back on their monthly spending (23%), whereas others will be willing to compromise on the property itself (17%). Half of all FTBs (56%) will also turn to their family for financial assistance to help build their deposit. One inevitable element of the house hunt that all buyers will need to contend with is finding an affordable area in which they can invest their hard-earned money. Post Office Money has also launched a new online tool, allowing new buyers to map out their deposit plans based specifically on property affordability in their chosen area: www.postoffice.co.uk/mortgages/this-is-my-home .
Ross Hunter

Ross Hunter

Post Office Money

Click here for more information on Post Office First Time Buyer Mortgages 

 

Research: Post Office Money