With a huge disparity between salaries and property prices there is a huge grey cloud looming over the property market. Without financial help, particularly those under 30 are seriously struggling to get a foot on the property ladder – adding to the growing generation rent. In 2019 it is generally assumed that you cannot buy a property on your own; inheritance, securing a very well-paid job or buying with a partner or friends are the typical answers to the riddle. However, what happens when not everyone has these options available?
Research by The National Housing Federation revealed some unsurprising statistics for first time buyers. On average, savers in the South East would have to save £1,410 per month to secure a deposit by 2021. With the average monthly income for the region being £2,509, this would leave £1,099 to spend on rent, utilities and general living costs. More shocking, however, is Londoner’s being left with just £533 per month if they wanted to seriously save to buy.
Here is how the rest of the UK looks for first time buyers:
| Area | Avg Monthly Income | Savings to Buy 2021 | Remaining Income |
| London | £2,833 | £2,300 | £533 |
| South East | £2,509 | £1,410 | £1,099 |
| South West | £2,077 | £1,000 | £1,077 |
| East England | £2,333 | £1,200 | £1,133 |
| East Midlands | £2,166 | £787 | £1,379 |
| West Midlands | £2,083 | £823 | £1,260 |
| Yorkshire & Humber | £2,023 | £725 | £1,298 |
| North East | £2,034 | £638 | £1,396 |
| North West | £2,083 | £723 | £1,360 |
Evidently, first time buyers are the most affected group of potential house buyers in the UK. Research from the Office for National Statistics reported in 2018 that UK properties now cost almost eight times the average yearly salary.
If you were to ask somebody under the age of 30 about the affordability of houses in the UK, you won’t be met with positive responses. The vast majority of young adults in the country have resigned themselves to the fact that they will never afford a house without serious financial help.
The bank of mum and dad
The first thought when somebody under 30 purchases a home – how much did their parents lend them? Sadly, without the help of mum and dad, the majority of first-time buyers cannot save a deposit despite earning enough to secure a mortgage. In 2018, 317,000 completions involved financial help from a parent, with the average amount lent approximately £18,000.
As touched upon, securing a mortgage is relatively easy without a humongous salary. The issue is saving for a deposit and any estate agent fees. With the average property price in the UK valued at £226,798 first time buyers would be looking for a 10% deposit of £22,679 which is hard to achieve when renting and trying to exist.
Securing a home in the UK
Buying a home with financial help should not be snubbed, getting that all important first foot on the ladder is an achievement for many. However, with generation rent becoming the norm, should we be embracing the change?
There are some serious benefits to renting, including lower monthly housing costs, the freedom to move and commit to short-term lets and zero maintenance and repair costs. There are also stronger rules and regulations in place to protect tenants and landlords, making renting less daunting and shaking off the stigma that renting is less secure. Believe it or not, you cannot get turfed out of a property on the spot.
Homeownership isn’t for everyone. With countless investors providing buy-to-let properties or injecting money into property developments, more and more rental homes are becoming available. Whilst there are long term benefits and added privacy when buying a home, there is no denying that it is difficult in the current market.
