According to a report just released by Post Office Money®, first-time buyers across the UK are saving up to an average of 21% of their new home’s value as a deposit. Getting on the property ladder is spurring one in three first-time buyers into working overtime, while a further 14% are prepared to get another job in search of extra funds to put away for a new home.
Those looking to enter the housing market are putting away an average of some £843 a month while saving for a deposit. However, this varies by region across the UK based on local wages and property prices. The lowest average monthly savings were £682 in Scotland, while it will come as no surprise that first-time buyers in London are saving a greater amount of £1,046 on average.
The average UK first-time buyer now takes 3.6 years to save for their first home – and this has reduced from last year’s average of 3.8 years.
The ability to save for a home in a shorter period may be due to many first-time buyers being willing to supplement their earnings. A third (33%) admitted to working overtime to bring extra cash, while 25% were raising extra cash by being thrifty and selling unwanted items on internet auction sites, such as eBay. Meanwhile, 18% of those questioned had actively sought out a better paying job in order to boost their saving power. Just under half (47%) of first-time buyers saving for a deposit had help from a partner, parent or had received an inheritance, while 29% said that they had no extra help when saving – preferring to rely on their own resources to succeed.
Our guide, How to save a deposit for a house or flat, has more ideas to maximise your savings.
In a list of 80 major towns and cities across the UK, London was the most expensive place to buy a home with an average house price of £538,132 . Based on an average deposit saved by a first time buyer in London of 32% (or £170,003) would take nearly 11 years.
At the other end of the scale, Blackpool was named as the least expensive location, with an average home costing just £110,000 and first-time buyers being able to save enough for a 20% deposit in two years nine months.
Ross Hunter, Post Office Money, comments: “Our study shows that the first-time buyer savings journey is taking less time, often due to generous financial contributions from loved ones who help to speed up the process. However, it’s clear that aspiring homeowners are still putting away large sums of money on a monthly basis and exploring an array of ways to bring in extra income.”
The Government’s Help to Buy ISA scheme is designed specifically for those looking to buy their first home and comes with a Government bonus that can boost your savings. However, those interested will have to move fast, as there are only a few days left until Help to Buy ISA closes to new savers on 30 November 2019.
It allows people to save up to £200 a month, after an initial deposit of up to £1,200. Once the saver has amassed £1,600, the Government will provide a 25% bonus up to a maximum of £3,000.
For those who miss the boat with this initiative, there is the Lifetime ISA – a tax-free savings account that allows savings of up to £4,000 per year with a Government bonus of 25%. These can be opened by anyone between the ages of 18 and 39, with the Government paying the bonus until the account holder reaches the age of 50. Savers can withdraw their funds without penalty for a first home deposit or on their 60th birthday.
There are also a huge variety of other savings accounts that may be suitable for those saving for a home. While easy access accounts may not have tempting interest rates at present, savers can choose from fixed rate bonds and notice accounts as a way to boost their interest, at the expense of quick access.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.