The average first-time buyer would have to save half of their earnings for almost a decade to afford a deposit, new analysis by the Home Builders Federation (HBF) has revealed.
The report, Broken Ladder, examines house prices, earnings and mortgage costs in different regions. It finds that, after covering rent and bills, the average first-time buyer in England would need to save 50% of their remaining monthly income over nine years to afford a deposit to buy a home. This rises to over a decade in the East of England, and to more than 13 years in London and the South East.
Even if a first-time buyer were to save 100% of their earnings, the analysis shows it would take four years to build up the funds required for the average house deposit.
In England – after rent, council tax and energy bills - the average first-time buyer in their twenties has £469 left each month. With the average first-time buyer home priced at around £250,000, the necessary deposit for such a purchase is 442% of their remaining income.
Despite Londoners earning more on average, the higher cost of living and house prices mean the average first-time buyer deposit in the capital equates to an eye-watering 680% of discretionary income.
Meanwhile, for the minority who have a deposit, the increased proportion of income that is now required to meet mortgage payments means homeownership remains unattainable.
In 2014, the monthly mortgage payment for the average first-time buyer was 47% of net salary. As of 2024, this has risen by 20 percentage points to 67%, solidifying homeownership as the domain of high earners or those with family wealth.
Alongside the higher mortgage rates and diminished consumer confidence, more and more people are being locked out of homeownership. However, for the first time in decades there is no active government support for aspiring homeowners.
Until recently, the Help to Buy scheme was in place which supported the purchase of almost 400,000 properties, the majority of which were first-time buyers.
HBF is calling for a new targeted homeownership scheme to boost first-time buyer deposits and give them access to new build mortgages at competitive rates. It’s also urging Government to work with lenders to expand the market for green mortgages, whereby the savings that energy efficient homes can offer on utility bills are factored into mortgage affordability criteria.
Neil Jefferson, Chief Executive Officer at HBF said today: “This latest analysis lays bare the reality of the affordability challenges facing younger generations struggling to access the housing market. The uncomfortable truth is that homeownership is being pushed out of reach of many – particularly those without the support of family wealth.
“Whilst Government’s recent moves to tackle long-standing challenges within the planning system are welcome, action is needed to help people get a foot on to the property ladder. The lack of affordable mortgage availability is stifling the market and snuffing out homeownership aspirations.”
Read Broken Ladder on the HBF website: hbf.co.uk/policy/broken-ladder