30 years to save for a deposit!

Mimi_Arc_en_ciel

Sorry if this has been posted elsewhere - I heard on the news today that it takes on average 30 years to save for the deposit now. :eek:

I'll be sticking to renting for the mean time then

http://www.mirror.co.uk/money/personal-finance/house-prices-first-time-buyers-need-1962846

somethingcorporate

The numbers are rubbish though aren't they?

The average FTB deposit used in those calculations are going to be skewed by FTBs that will not be saving a deposit but have it gifted by parents.

If those figures were 10% deposits which is enough to get on the housing ladder the time taken to save one would fall significantly.

Edit: In fact it suggests that the average deposit in England for FTBs is 20% and whilst the statistics may play this out it doesn't make this the minimum required and is going to be skewed by all sorts of things that shouldn't be factored into the minimum requirement for a FTB to get on the ladder.

sirmosh

It's a matter of how much do you want to own a house. I know people renting big 3 bedroom houses who spend so much of their income on accommodation that they'll probably never be able to buy. I know others who have kept their outgoings to a minimum and saved heavily for a few years who now own a house.

Cycrow

and theres some who can stay at home so they dont have to pay much in rent, whereas others have no choise

Reue

What a stupid headline with terrible calculations.

Take the "30 years" one for a single person in London:

LONDON
Average first-time buyer house price: £278,417
Average first-time buyer deposit: £55,683
Years for a couple to save average deposit: 10.8
Years for a couple with a child to save average deposit: 20.5
Years for a single person to save a deposit: 29.5


so £55,683/29.5 years = £1884 per year or £157 per month.

So yes.. If someone only saves £157 per month then it will take them 30 years to buy a property in the most expensive city in the country.

Realistically, people will save more or will move to cheaper areas of the country if they are serious about owning a home.

Cisco001

Reue wrote: »

What a stupid headline with terrible calculations.

Take the "30 years" one for a single person in London:

LONDON
Average first-time buyer house price: £278,417
Average first-time buyer deposit: £55,683
Years for a couple to save average deposit: 10.8
Years for a couple with a child to save average deposit: 20.5
Years for a single person to save a deposit: 29.5


so £55,683/29.5 years = £1884 per year or £157 per month.

So yes.. If someone only saves £157 per month then it will take them 30 years to buy a property in the most expensive city in the country.

Realistically, people will save more or will move to cheaper areas of the country if they are serious about owning a home.

Your calculation is wrong. Don't forget bank usually allow you borrow 3.5 - 4 x annual salary.
The average UK salary is around £26k. I would assume Londoner would have a higher wages.
Let's say £34k?
So if the house cost £278k, the deposit for a single person has to be £142k in total. It is talking about saving £400 per month.

WestonDave

Was discussing this elsewhere earlier - worked out that in 1971 my parents paid roughly 11 times the average wage for their house. In 2012 it was worth just under 11 times the average wage. In 1971 it was strictly 10% or more deposit, you had to have been saving with the building society you wanted to borrow from, and even if the wife had a job it was mans wage only that was taken into consideration.

The difference is that these days people expect to be able to buy a house as well as paying a couple of thousand per year on foreign holidays per couple, getting on for a grand for a couple on top notch mobile phone contracts, maybe another grand on broadband and pay TV, plus run a car. I know for certain that back in the day my parents didn't have a car (Dad couldn't even drive until I was around 7 as I can remember Mum teaching him), didn't have a TV, and holidays consisted of a trip to see relatives (their honeymoon was on Jersey!). These days an average wedding costs around £18k which would get you a 10% deposit on a house in most places in the UK.

Its not so much houses that have become more expensive as in relation to earnings they don't really appear to have, but that people have many more things they want in life other than "just" a house so the relatively static price of a house seems more expensive when other things are falling in relative terms.

Reue

Cisco001 wrote: »

Your calculation is wrong. Don't forget bank usually allow you borrow 3.5 - 4 x annual salary.
The average UK salary is around £26k. I would assume Londoner would have a higher wages.
Let's say £34k?
So if the house cost £278k, the deposit for a single person has to be £142k in total. It is talking about saving £400 per month.

I dont think the article is actually referring to borrowing amounts etc at all. The calculations seem to be purely on saving up 20% of the average house value.

Cisco001

Reue wrote: »

I dont think the article is actually referring to borrowing amounts etc at all. The calculations seem to be purely on saving up 20% of the average house value.

Then that article calculation is unrealistic. If a single person's 4 x salary = 223k. It means that person earning £55k p.a. I believe that person would certainly take less than 30 years to save the deposit.

dtsazza

Mimi_Arc_en_ciel wrote: »

Sorry if this has been posted elsewhere - I heard on the news today that it takes on average 30 years to save for the deposit now. :eek:

I'll be sticking to renting for the mean time then

I wouldn't pay too much attention to the "average" (even disregarding any issues of quality), when thinking about your particular case.

If it takes you two years to save for a deposit, then you can have a deposit in two years. If it takes you fifty, then it takes you fifty. What the Mirror calls the average has no bearing on how long you need to stick to renting.

Don't let it get you down (assuming you're taking it as bad news), just keep taking the best choices open to you and enjoying the positive consequences.

Reue

Cisco001 wrote: »

Then that article calculation is unrealistic. If a single person's 4 x salary = 223k. It means that person earning £55k p.a. I believe that person would certainly take less than 30 years to save the deposit.

Im trying to find the shelter calculator it references to see what they are using for their figures...

Still believe that the savings rate they are using to get those timescales is very low though.